The Financial Conduct Authority (FCA), Bank of England and Prudential Regulation Authority (PRA) are considering recommendations made by the Treasury Select Committee of MPs last year.
In responses published today, the regulators agreed with the committee’s observation that improved operational resilience would reduce the number and the impact of IT or operational incidents.
All three are developing “major changes” to the regulatory framework to ensure adequate operational resilience.
The watchdogs added they “welcomed” committee recommendations for improving resilience.
The committee concluded that current level of financial services IT failures is unacceptable and regulators must act to improve operational resilience.
It was added that financial sector levies should increase so regulators can hire experienced staff and they must use enforcement powers to ensure failures do not go unpunished.
Unacceptable harm
Mel Stride, chair of the Treasury Committee, 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.
“The committee urged regulators to take action to improve the operational resilience of firms in the financial services sector.
“It recommended that regulators should increase financial sector levies if greater resources are required, ensure individuals and firms are held to account for their role in IT failures, and ensure that firms resolve customer complaints and award compensation quickly.
“HM Treasury has rightly recognised that operational resilience of the financial services sector and the protection of consumers are key priorities. It is considering some of the recommendations made in the committee’s report.”
Stride acknowledged regulators’ pledges to take forward the committee’s recommendations as they develop and implement changes to ensure adequate operational resilience.
“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,” he added.
