A report the Treasury Select Committee said prolonged IT failures must not be tolerated adding “the current level and frequency of disruption and consumer harm is unacceptable”.
A Treasury Committee report has called on regulators to increase levies to deal with unacceptable IT failures in financial services.
The unanimously-agreed report on IT failures in the financial services sector said that whilst completely uninterrupted access to banking services is not achievable, prolonged IT failures should not be tolerated.
It added that the current level and frequency of disruption and consumer harm is unacceptable.
The Treasury Committee’s report has made a series of recommendations to overcome this and improve operational resilience, including ensuring accountability of individuals and firms, increasing financial sector levies to ensure that the regulators (which are the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), and Bank of England (BoE)) are sufficiently staffed, and ensuring that firms resolve complaints and award compensation quickly.
Steve Baker MP, the Treasury Committee’s lead member for this inquiry, said: “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.
“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.
“For too long, financial institutions issue hollow words after their systems have failed, which is of no help to customers left cashless and cut-off.
“And for too long, we have waited for a comprehensive account of what happened during the TSB IT failure.
"Our inquiry into service disruption at TSB remains open, and I’ve no doubt that the Committee will want to examine Slaughter and May’s report and the progress of the regulators’ investigation.”
“The Committee has made a series of recommendations to the Government and regulators on how the impact of IT failures can be prevented and mitigated to ensure that consumers are protected.”
Stephen Jones, UK Finance chief executive, said the industry was working hard to improve resilience and make sure disruption is kept to a minimum.
He added: "Operational resilience is crucial in a modern financial system and the industry continues to invest billions to ensure systems, human and digital, are robust and secure.
"When incidents do occur, firms work around the clock to minimise disruption and get services back up and running as quickly as possible.
"Digital innovation is transforming the way money is managed with 24/7 access to payment systems, increasing the range of day to day banking options and providing better back-up for customers if a service is temporarily disrupted.
"The industry conducts sector-wide exercises with regulators to ensure it is prepared to respond effectively to any major disruptions or events as part of its continued commitment to maintaining the resilience of the financial system.
"UK Finance continues to engage with government over how coordination between regulatory authorities could be improved, seeking to avoid overlapped or rushed mandatory change programmes that impact firms’ ability to protect their customers."
The report was agreed when Catherine McKinnell MP was Interim Chair. Rt Hon. Mel Stride MP has since been elected as the Chair of the Treasury Committee.
