Customers ‘left cashless’ by IT failings, say MPs

Committee tells of ‘unacceptable’ faults

CUSTOMERS ARE being left “cashless and cut off” by unacceptable IT failures in the financial services sector, the Treasury Committee has warned.

Prolonged IT failures should not be tolerated – and the current level and frequency of disruption and consumer harm is not acceptable, according to the MPs.

With bank branches and cash machines disappearing, customers are increasingly expected to rely on online banking services.

But the committee said these have been significantly disrupted due to IT failures, harming customers left without access to their financial services. Firms must resolve customer complaints and award compensation quickly, the MPs added.

Financial sector levies may need to be increased to ensure that regulators the Financial Conduct Authority, Prudential Regulation Authority, and the Bank of England are sufficiently staffed, and ensuring firms resolve complaints and award compensation quickly, according to the MPs’ report.

The Treasury Committee’s lead member for the inquiry, Steve Baker, 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

Financial institutions issue hollow words after their systems fail,

Steve Baker, the Treasury Committee’s lead member for the inquiry.

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.

“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 report was agreed when Catherine McKinnell was interim chair, with Mel Stride having since been elected as the chair of the Treasury Committee.

The MPs said there is a “concerning” lack of consistent and accurate recording of data on IT incidents. They stressed regulators must ensure they have the appropriate skills and experience to be able to intervene to improve the operational resilience of the financial services sector.

If this proves challenging, the regulators should increase the financial sector levies to ensure that they can hire the staff with the expertise and experience required, the MPs said.

TSB suffered a high-profile IT failure last year which left customers unable to access their accounts, following the introduction of a new system. Up to 1.9m people lost access to online banking services.

The MPs said regulators must provide them with the outcome of their investigation into the TSB IT failure as soon as possible.