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MPs slam bank IT failures and float higher levies on sector

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MPs slam bank IT failures and float higher levies on sector
An employee talks on his mobile phone inside a newly opened TSB bank branch in central London, on September 9, 2013. British bank TSB relaunched on Monday, ending its 18-year absence from the high street to become the nation's eighth biggest lender, its parent group announced. Part-nationalised Lloyds Banking Group (LBG) had decided earlier this year to offload the 200-year-old TSB via a flotation, in order to meets EU concerns over its vast state bailout. AFP PHOTO/CARL COURT (Photo credit should read CARL COURT/AFP via Getty Images)

MPs have harshly criticised IT failures among some of the UK’s biggest banks as “unacceptable” and recommended that regulators take action to make lenders improve their systems.

Read more: TSB returns to growth after IT meltdown

A detailed report from parliament’s Treasury Select Committee (TSC) said bigger levies on the financial sector could be used to ensure watchdogs such as the Financial Conduct Authority (FCA) have the resources to tackle the issue.

The committee’s report comes in the wake of the computer meltdown at TSB, which last year shut tens of thousands of customers out of vital banking services and cost the bank £330m.

A study earlier this year showed that customers at hit daily by IT failures at UK banks, preventing them from making payments or checking their balances. With bank branches and cash machines disappearing, IT failures can shut off customers from their lenders completely.

Steve Baker, the Treasury Committee’s lead member for the 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 regulators must take action to improve the operational resilience of financial services sector firms.” he said.

“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.”

The report said regulators must make sure banks do not use the costs of upgrading to better IT systems as an excuse for computer problems.

It also said watchdogs must use their enforcement powers to make sure failures are punished. “Regulators must have teeth and be seen to have teeth,” the TSC said.

Financial services trade body UK Finance said: “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.”

Read more: Ranked: The high street banks with the most IT outages

The report also urged regulators to publish their report into the TSB IT failure “as soon as possible”.

(Image credit: Getty)