Bank of England to set minimum service requirements after TSB and Visa outages

The recent IT failures at TSB and Visa, which caused major problems for customers, have pushed the Bank of England towards setting minimum expected standards of service provision in the event of disruption.

According to the Financial Times, the regulator’s Financial Policy Committee (FPC), which attempts to find and prevent risks to the UK financial system, is developing a new framework of minimum services that must be provided during IT failures.

Lyndon Nelson, deputy chief executive of the Bank of England’s Prudential Regulation Authority, was reported as saying: “We have seen an increase in the number of operational incidents – be they caused by internal failures or from external attack.”

Nelson said the FPC had been considering its tolerance of failures in the sector. “As part of this work, it is likely that the FPC will set a minimum level of service provision it expects for the delivery of key economic functions in the event of a severe but plausible operational disruption,” he said.

In May, TSB customers experienced major IT problems when the bank botched the migration of millions of customer accounts to a new core banking platform. Customers were locked out of their accounts, money appeared to disappear for some, while others were even able to see other customers’ accounts.

Then, earlier this month, millions of businesses across the UK and Ireland were unable to accept credit card payments when a hardware failure caused major service disruption at card payment giant Visa.

Both incidents demonstrated the huge problems caused when IT fails at major financial services providers. Financial services firms are becoming increasingly reliant on IT, often provided by third-party suppliers.

TSB’s is not the first IT disaster of this scale at a UK retail bank. In 2012, a glitch in the CA7 batch process scheduler at RBS ended with 12 million customer accounts being frozen. 

Customers were left unable to access funds for a week or more as RBS, NatWest and the Ulster Bank manually updated all account balances.