28 Oct 2019
‘Unacceptable’ Online Banking Failures Condemned by MPs
Customers are being left “cashless and cut off” as a result of online banking IT crashes, say MPs. As a result, banks have been warned that tighter regulations and financial levies may become necessary.
With online banking being used by an increasing number of consumers, the Treasury Committee has expressed concerns regarding the frequency of service crashes. Declining availability of cash machines and branch closures mean that customers rely heavily on online banking services to manage their money. MPs say the current level of disruption caused by online banking outages is “unacceptable”.
In a newly published report, the committee suggests greater urgency is required to ensure online banking systems are functional and resilient. The report also claims that customer complaints and compensation requests must be dealt with more quickly.
MPs say financial regulators, such as the Financial Conduct Authority, Prudential Regulation Authority and the Bank of England, are unable to effectively manage the level of IT failures due to lack of experience and staff. They therefore suggest that additional resources and funding could be subsidised by increasing financial levies on banks.
Steve Baker, who is heading up the inquiry by the Treasury Committee, said they “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.”
It will be up to the regulators to “take action to improve the operational resilience of financial services sector firms.” They will also need to offer guidance to banks regarding acceptable levels of disruption and maintain a very low tolerance for any impact of such disturbances on consumers.
According to the BBC, major banks are affected by at least 10 online outages a month, with Barclays topping the list. Last year, TSB left up to 1.9 million customers without access to their accounts, due to an online banking crash. Mr Baker said:
“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.”
In the report, MPs also noted that the increased use of third-party cloud services providers “stood out as such a source of systemic risk”. They suggest regulation may also be required for such providers.