Banks: Internet Banking

Lord Sharkey Excerpts

Monday 1st February 2016 Lords Chamber

Asked by

[Lord Sharkey]

To ask Her Majesty’s Government what assessment they have made of the number of failures of retail banks’ software systems to provide internet banking to customers.

[Lord Ashton of Hyde (Con)]

My Lords, it is the responsibility of firms to ensure the resilience of their IT systems. However, the financial authorities take the resilience of the sector seriously, which is why the Financial Conduct Authority and the Prudential Regulation Authority recently completed a technology resilience review of the largest UK retail deposit-taking firms. The review’s outcomes have not been published, but the authorities are developing work plans to ensure that further improvements are made to IT systems, and customers protected.

[Lord Sharkey (LD)]

Two years ago, the FCA said:

“We want to make sure that the banks have resilient IT systems in place that are able to cope with consumer demand, so customers aren’t left financially stranded or disadvantaged”.

It has not happened. HSBC alone had three systems failures in January, the latest last Friday, the most critical day of the month. Even the Bank of England systems collapsed at the end of 2014. Can the Minister say that the banks are devoting sufficient time and resource to long-term solutions and not just looking for an even more short-term patch? What assurance can he give that the FCA is really on top of all this?

[Lord Ashton of Hyde]

My Lords, it is true that there have been incidents, but none as serious as the one that occasioned the “Dear Chairman” review in 2012. Since then, they have not been as serious as that. I assure the noble Lord that the FCA and the PRA are taking this very seriously. They have initiated a second “Dear Chairman” exercise, which has sought to assess the improvements made since the first exercise and the extent to which good resilience practices are embedded with those firms. The regulators are aware that firms are spending considerable amounts on their IT systems.