MPs demand action over rise in online bank crashes

MPs have condemned the level of IT failures at banks, warning that financial levies on firms and more regulation may be needed. A Treasury Committee report said the frequency of online banking crashes and customer disruption was "unacceptable".

The report, published on Monday, said with bank branches and cash machines closing, there was greater urgency to ensure online banking worked. Major banks typically suffer more than 10 online outages a month.

Customers are being left "cashless and cut off", the report said. Firms could do much more to ensure their IT systems were resilient and to resolve complaints and compensation more quickly.

The MPs suggest the three major regulators - Financial Conduct Authority, Prudential Regulation Authority, Bank of England - do not have the staff and experience to deal with the growing number of computer failures. An increase in the financial levies on banks may be needed to ensure that the regulators are adequately funded and resourced , the report says.

MPs are also worried about the increase use of third-party providers of cloud services for computing power and data storage. "The consequences of a major operational incident at a large cloud service provider, such as Microsoft, Google or Amazon, could be significant," the report said. "There is, therefore, a considerable case for the regulation of these cloud service providers to ensure high standards of operational resilience."

Cloud services "stood out as such a source of systemic risk" for the financial system, the MPs said. Steve Baker, the Treasury Committee's lead member on 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."

Mr Baker added: "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." The MPs also said there is a "concerning" lack of consistent and accurate recording of data on IT incidents.