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Bank of England demands lenders prepare better for IT failures after TSB and Visa meltdowns

The Bank of England is demanding City firms better prepare for IT failures after systems meltdowns at TSB and Visa disrupted vital services for millions of customers.
Regulators on Threadneedle Street are considering mandating a minimum level of service for key finance firms, even if they are hit by a major cyber attack or other technical malfunction.
TSB has laboured through eight weeks of IT failures following a botched system switch in April, which led to weeks of customers being unable to access mobile and online banking services.
The bank’s under-fire boss Paul Pester last week admitted to MPs a litany of knock-on faults, with 1,300 people losing money through fraud attacks, while 370 former customers were wrongly told they had died.
Meanwhile a technical issue at Visa at the start of this month left millions of customers unable to pay for goods and services on a Friday evening, although it was fixed hours later.
Lyndon Nelson, deputy chief executive of the Prudential Regulation Authority (PRA), which is part of the Bank of England, said at a City event today that it was “likely” new rules would be rolled out requiring finance firms to improve IT resilience.
Bank of England demands lenders prepare better for IT failures after TSB and Visa meltdowns

Bank of England in Spring
He said the Bank was considering setting “a minimum level of service provision it expects... in the event of a severe but plausible operational disruption.”
Mr Nelson said he wanted firms to be on a “WAR footing” in the face of the growing risk of cyber attacks and IT failures. He explained ‘WAR’ was an acronym meaning “withstand, absorb, recover”.
He said he wanted a system “able to withstand growing threats... so that the critical functions in which customers, the sector and the economy rely are unaffected.”
The Bank was developing a range of “supervisory tools” to aid it in its oversight of IT systems, Mr Nelson added.
Separately Andrew Bailey, chief executive of fellow City watchdog the Financial Conduct Authority (FCA), defended its decision not to ban Barclays boss Jes Staley from finance after he attempted to umask a whistleblower.
Mr Staley was fined ?642,000 by both the FCA and PRA for his misconduct in 2016. Barclays also docked his bonus by ?500,000.
Bank of England demands lenders prepare better for IT failures after TSB and Visa meltdowns

Jes Staley was fined for attempting to unmask a whistleblower

Credit:
Jason Alden/Bloomberg
Despite the penalties, the decision not to ban Mr Staley dismayed whistleblower lawyers, who described the fines as “bus money” for Mr Staley, who earned ?3.9m last year.
“We spent a lot of time on the Staley question,” Mr Bailey told MPs on the Treasury select committee today.
Mr Bailey said that while the FCA had found Staley’s actions were “negligent, stupid and grossly wrong”, the FCA had judged they were not “dishonest”.
“If it’s dishonesty, you’re out,” he said.
The regulatory boss also told MPs the FCA was close to completing the next stage of its investigation into past mistreatment of struggling small companies by state-controlled lender RBS.
Mr Bailey told the Treasury select committee that the watchdog was set to complete its probe into whether ex-RBS bosses were responsible for the scandal at the bank’s now-defunct turnaround unit the Global Restructuring Group by the end of July.
He said the final publication date of its report would then depend on whether or not the FCA decided to pursue enforcement action against parties involved, which could involve getting consent from those named - a process sometimes known as Maxwellisation.
Mr Bailey said he would welcome any move by politicians to review the statutory constraints on the FCA giving strict protections to individuals implicated in their investigations.
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