Regulators to review financial sector levy in the wake of “unacceptable” IT failures
Regulators have welcomed a number of reforms to the financial services sector after the Treasury Committee called its IT failures “unacceptable”.
The Treasury Committee’s report, which was published last October, called on the regulators to address the growing number of tech issues in the financial services sector.
As part of the proposed reforms, the committee called for an increase in financial sector levies so regulators can “hire experienced staff”.
The FCA’s Andrew Bailey has now responded and said there had not yet been any need for a special levy since it “has been possible for the authorities to increase resources on operational resilience”. The letter was also signed by the Bank of England’s deputy governor, Sir Jon Cunliffe, and Sam Woods, deputy governor of the Prudential Regulation Authority.
The regulators did say that they will “keep the possibility of raising the levy in the future under review.”
The select committee also called on regulators to use their enforcement powers to ensure failures do not go unpunished.
The Treasury also called for reform within the sector, notably because of the impact of the IT failures on consumers. Responding to the report, the government said companies should share information with consumers during an incident, not least so they can potentially mitigate the impact themselves.
Chair of the Treasury select committee, Mel Stride MP, said: “The harm caused to consumers from IT failures in the financial services sector is unacceptable. The previous committee sought to get to the bottom of what’s causing these failures and how consumers can be better protected.”
Responding to the government and the regulators, Stride said: “The Committee will follow up on these responses as part of our regular scrutiny sessions with HM Treasury and the regulators to ensure that all required actions are being taken to protect consumers.”
The calls for reform come after a string of IT failures in the banking industry. Most notably an incident which, in April 2018, left millions of TSB customers without access to online banking.
The meltdown led to an investigation by the FCA and former TSB boss Paul Pester was a sacked a few months after the incident.
A spokesperson for industry body UK Finance said: “We support the announcement from the Treasury this week to improve coordination between regulators which will help to ensure the flow of regulatory activity is manageable for firms and avoids unintended interactions, allowing firms to focus on their primary role serving consumers and creating wealth for the UK economy.”
Hugo Van den Toorn, offensive security manager of security firm Outpost24, said: “Sometimes difficult choices have to be made to allow organisations to deliver quality, and hopefully this levy will accelerate proper decision making in favour of a higher quality and more resilient industry.”