UK Treasury Committee: Regulators must punish banks for IT failures
The Treasury Select Committee of the UK government has called on regulators to hold banks to account for an “unacceptable” amount of IT failures in the financial services sector.
In a new report on banking outages and the effects these have on the end customer, the group has made a series of recommendations which include greater regulatory action, higher fines, and better data recording of failures.
The Treasury Select Committee is charged with examining the expenditure, administration and policy of the UK Treasury, and by extension regulators including the Bank of England, Prudential Regulation Authority (PRA), and Financial Conduct Authority (FCA).
It states that regulators must use the tools at their disposal to hold individuals and firms to account for their role in IT failures and poor operational resilience. “To ensure accountability for failures, regulators must have teeth and be seen to have teeth,” it writes.
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If future incidents occur without proper sanction, the committee could explore via parliament whether the regulators’ enforcement powers are “fit for purpose”.
Conclusions on the investigation of the 2018 TSB IT failure, which saw a botched core banking replacement leave customers without access to their accounts for weeks at a time, and which cost the bank £105 million, have still yet to be handed over to the committee.
“The number of IT failures that have occurred in the financial services sector, including TSB, Visa and Barclays, and the harm caused to consumers is unacceptable,” says Steve Baker MP, lead member for the Treasury’s enquiry.
“The Committee, therefore, launched this inquiry to look ‘under the bonnet’ at what’s causing the proliferation of such incidents, and what the regulators can do to prevent and mitigate their impacts.
“The regulators must take action to improve the operational resilience of financial services sector firms. They should increase the financial sector levies if greater resources are required, ensure individuals and firms are held to account for their role in IT failures, and ensure that firms resolve customer complaints and award compensation quickly.”
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