Barclays and RBS on naughty step: Banks told to explain service meltdown to UK politicos

Treasury Committee infuriated at latest TITSUPs*

The influential Treasury Committee has demanded that banking execs at RBS Group and Barclays must explain why customers were again unable to access online services at the tail end of last week.

On Thursday, 20 September, Barclays' systems were offline for hours, while the Royal Bank of Scotland, NatWest and Ulster Bank went for an unscheduled nap on the following day.

Although the banks got their systems back up and running quicker than the massive meltdown that hit TSB earlier this year, MPs are increasingly frustrated at the sector's all-too-common digital blackouts.

"This is yet another addition to the litany of failures of banking IT systems," said Treasury Committee chair Nicky Morgan. "It simply isn't good enough to expose customers to IT failures, including delays in paying bills and an inability to access their own money."

In the aftermath of TSB's technical crisis, Morgan warned that such events cause serious reputational damage to online banking in general.

Continuing the committee's efforts to hold execs' feet to the fire, the MP has written to the top brass of RBS Group – which owns NatWest/ Ulster Bank – and Barclays asking them to offer full explanations for the balls-up.

The letters to RBS and Barclays (PDFs) pose the same set of questions to the bosses. These include requests for technical details – which banks often prefer to keep close to their chest – on what caused the failure, and why any controls to mitigate against such failures had themselves failed.

Morgan also aimed to assess the way the banks communicated with the public – TSB boss Paul Pester eventually left the business after his response was branded misleading and complacent.

The Barclays and RBS bosses were asked to specify when the banks first became aware of last week's system failure, and how long it took to issue a public statement, as well as how customers will be compensated.

The MP also called for details on what discussions the banks had with the Financial Conduct Authority, and how quickly the watchdog was informed.

The FCA and the Bank of England's Prudential Regulation Authority recently published a paper which makes plain that they are considering policies that force banks to improve operational resilience.

"Boards and senior management should assume that individual systems and processes that support business services will be disrupted, and increase the focus on backup plans, responses and recovery options," the document published in July stated.

Morgan said the Bank of England's plans to run IT stress tests on banks "can't come soon enough".

She also noted many banks are using their mobile and online services as justifications for closing high street branches – but that these "carry little weight if their banking apps and websites cannot be relied upon".

Morgan asked for the full description of the failure and any consequences by Friday 28 September at 5pm. ®

* Traditionally Inept Transaction Services Unusually Problematic