A UK government committee has warned that regulators must act to reduce an increased amount of IT failures in the financial services sector. The number of incidents has been deemed ‘unacceptable’ by the Treasury Committee.
With online banking so popular in the digital era, customers are relying on online services in order to manage their accounts – but they are becoming frustrated at the frequency of IT disruption, the committee stated in its report, IT Failures in the Financial Services Sector.
While the committee conceded that completely uninterrupted access to banking services was not achievable, it stated that prolonged IT failures should not be tolerated and the current level and frequency of disruption and consumer harm was unacceptable.
The report stated that customers are being left ‘cashless and cut off’ and suggested ways to overcome the current level and frequency of disruption, as well as consumer harm.
The committee also highlighted the cloud service provider market as a source of ‘systemic risk’. It said the consequences of a major operational incident at a large cloud service provider, such as Microsoft, Google or Amazon, could be significant, and that there was a considerable case for the regulation of these providers to ensure high standards of operational resilience.
Commenting on the report, Steve Baker MP, 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 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.”
He added: “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.”