Out-Law News | 31 Mar 2014 | 3:17 pm | 1 min. read
Details of the review were contained in the Financial Conduct Authority's (FCA's) new business plan (52-page / 4.56MB PDF). The FCA will undertake the review together with the Bank of England and Prudential Regulation Authority (PRA) and report on the findings in early 2015.
In its business plan the FCA said that the regulators' review will assess "how far individual firms have progressed" since it wrote to the financial institutions in 2012 and asked the companies to detail the action they were taking "to ensure the overall resilience of critical infrastructure and banking processes".
"The aim is to assess how well firms manage their own exposure to risks, to what extent IT risks are discussed at board level, and whether boards have the skills and expertise to challenge executive decisions," the FCA said.
Clive Adamson, director of supervision at the FCA added: "To access and manage our money we depend on the banks’ IT systems being reliable. But IT outages continue, interrupting key banking services. 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."
Earlier this year Sam Woods, director of domestic UK banks at the PRA, confirmed to a UK parliamentary committee that the regulator had asked a number of banks for information about their IT systems after RBS Group reported a failure of its systems to update some customers' account balances for a time in 2012. A further IT glitch in December last year led to some RBS Group customers experiencing problems paying for goods and accessing money from their accounts.
At the time Woods said a number of "deficiencies" had been identified during the probe but that the "antiquated" nature of bank IT systems would mean it could take a long time for those issues to be addressed. "I feel we are a very long away from being able to sit here with confidence and say that the UK banks' IT systems are robust," Woods said.
Woods said that major IT outages are "completely unacceptable" and that they present a "threat to financial stability". The PRA is eager to ensure that banks understand the vulnerabilities present in their IT systems and mitigate the risk that those risks result in outages. The regulator's primary concern is that the UK banking system continues to function, a spokesperson for the PRA told Out-Law.com in January.