U.K. Bank Boards Need to Oversee Info Technology, Lawmaker Saysby
More investment needed to reduce payment-system failures
Regulatory group overseeing cybersecurity should be created
British banks Barclays Plc, HSBC Holdings Plc and Royal Bank of Scotland Group Plc need more information-technology experts on their boards after a series of computer-system failures in the past year left customers cut off from their accounts, according to Treasury Committee Chairman Andrew Tyrie.
Banks need to spend more on modernizing computer systems and boards should take direct responsibility for technology oversight, rather than relying on consultants, Conservative Party lawmaker Tyrie said after investigating the breakdowns. The Bank of England should set up a group to monitor banks and report on IT issues to government, he said.
“These risks and problems are causing a considerable amount of distress and disruption to millions of people and thousands of businesses,” Tyrie said in a letter to the acting head of the U.K.’s Financial Conduct Authority, Tracey McDermott. “IT risks need to be accorded the same status as credit, financial and conduct” meaning “more, and higher quality, investment is probably required.”
British banks have struggled with a string of computer failures in recent years -- some attributed to obsolete software and others to malicious activity by hackers. HSBC’s personal and business customers were unable to access their online or mobile banking services for three days earlier this month, following a computer glitch in August that left 275,000 business payments delayed.
A payments outage at RBS in June affected 600,000 credit and direct-debit transactions, only seven months after the FCA fined the bank 56 million pounds ($80 million) for a computer failure that left millions of customers without access to their accounts for weeks.
“Major banks will be at risk until they have managed to simplify their systems to a degree that makes them easier to manage,” Tyrie said in the letter, published alongside correspondence from bank executives including Barclays Chairman John McFarlane, HSBC’s U.K. and Europe CEO Antonio Simoes and RBS Chief Executive Officer Ross McEwan.