UK Treasury Committee commences new inquiry into IT failures in financial services sector
The inquiry is launched a couple of months after a wave of tech issues plagued the services of several UK banks and payment services providers.
The UK Treasury Committee is today launching a new inquiry into IT failures in the financial services sector. The inquiry will focus on the common causes of operational incidents in the sector, the ways in which consumers lose out as a result of such incidents, and whether regulators have the relevant skills to adequately hold people to account.
The Committee will examine the ability of financial services institutions such as banks to guard against service disruptions and to put things right in the event that disruptions occur.
Commenting on the launch of the inquiry, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said:
“The number of IT failures at banks and other financial institutions in recent years is astonishing. Since becoming Chair of the Committee 16 months ago, there have been problems at Equifax, TSB, Visa, Barclays, Cashplus and RBS, to name a few”.
The Treasury Committee would welcome evidence on topics, such as:
- The extent to which operational incidents are becoming more frequent, and how the prevalence of such incidents may change in future as consumers and firms come to rely more heavily on technology.
- The common causes of operational incidents in the financial services sector.
- The extent to which there exist “single points of failure” and/or other sources of concentration risk in the financial services sector.
- The incidence of multiple old legacy systems and the nature of their connectivity, and the impact of retrofitting web based/mobile systems to legacy systems.
- The risks associated with integrating banks/systems, following takeovers and mergers, for example.
- The quality of relevant technical documentation.
- The impact of outsourcing on operational resilience.
- The ways in which consumers typically lose out as a result of operational incidents, including inconvenience and vulnerability to fraud.
- Examples of best practice with respect to firms’ responses to and handling of operational incidents, including approaches to communicating with customers, identifying and addressing the causes of incidents, and handling customer complaints and compensation.
- What should be learned from the operational incidents witnessed in recent years.
- The ability of the regulators to ensure firms are adequately guarding against service disruptions.
- Whether the regulators have the relevant skills to hold appropriate parties to account in the event of significant operational incidents.
- Approaches to operational resilience in different jurisdictions.
- The opportunities and risks presented by the application of new technology in the financial services sector with respect to operational resilience.
- What should be considered an appropriate level of tolerance for operational disruptions.
The Committee welcomes submissions by January 18, 2019.
Let’s recall that, in September this year, UK Treasury Committee chair Nicky Morgan called on for Natwest and Barclays to provide explanations over service failures that had affected their customers. In July, the Committee asked PayPoint to provide details on the disruptions that had plagued its services. In June, Visa came under fire over tech issues that made some services inaccessible to Visa cardholders and resulted in more than 5.2 million transactions failing to process correctly.