Feeds

Banks told to spend £1bn on new IT to prepare for failure

How to ensure an orderly collapse of the banking system

Choosing a cloud hosting partner with confidence

The Financial Services Authority is consulting with UK High Street banks about the need to improve their IT systems so that consumers will get their money back more quickly if a bank should fail.

The FSA estimates that British banks would have to spend just under £1bn to upgrade systems so they could provide a comprehensive list of accounts within 48 hours as the first step to giving them their money back. Such payments are made via the Financial Services Compensation Scheme (FSCS).

But Peter Tyler, policy director for retail at the British Bankers Association, told the Register: "We agree with the broad thrust of the FSA proposals but not how they suggest we should get there. There is a problem which needs addressing here but the FSCS is not the best way to do it.

"The FSCS was not designed with the collapse of a large or medium-sized bank in mind. Rather than have a large bank send out millions of cheques to customers who must then open new accounts, people should have constant access to their accounts."

Tyler said Bradford & Bingley was an example of a better way to deal with such failures - the government effectively nationalised the bank and shifted its book of retail accounts to Santander so customers had continuous access to their money.

The FSA consultation suggested banks would need to upgrade IT systems and modify applications in four main areas - data cleansing, eligibility account flagging, creating a single customer view - bundling all a person's accounts into one place, and additional capacity in all systems should a fast payout be required. Such systems would take at least 18 months to put in place and would cost £891.3m over five years.

Tyler believes that a different approach would still require some bank spending on improved systems, but less than that proposed by the FSA.

The consultation is open until 6 April. The FSA release is here. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.