UK regulators call time on lengthy glitches in banking services

By Huw Jones

LONDON, Dec 5 (Reuters) - Regulators made proposals on
Thursday to strengthen the ability of banks and payment firms in
Britain to recover from disruptions to services within set
timeframes.

A parliamentary committee called for changes in October
following a string of IT failures at banks, most recently one at
TSB that left thousands of customers unable to make payments
from their accounts.

The Bank of England and the Financial Conduct Authority have
proposed that banks and financial market infrastructure (FMIs)
firms like Visa that make payments possible set "impact
tolerances" for important services.

This would quantify the maximum level of disruption they
would tolerate in terms of time, volume of business or number of
customers affected.

A metric based on time alone may be insufficient, the
regulators said, taking a more nuanced approach from an earlier
discussion paper.

Firms will have to spell out what back up plans they have to
stay within these tolerances.

Firms will set their own tolerances but should expect "close
supervisory scrutiny and engagement", the regulators said.

"It is in the public interest that a resilient financial
system is able to supply the most important services with
minimal interruption even during severe operational events," FCA
Chief Executive Andrew Bailey said in a statement.

The regulators also issued papers on how operational
resilience relates to services outsourced by financial firms,
such as cloud computing, that can leave them vulnerable to
disruptions.

Firms must be certain that important services can recover
from a disruption within a set period even when they rely on
outsourcing or third party providers for those services, the BoE
said.

"Firms and FMIs should use impact tolerances as a planning
tool and should assure themselves they are able to remain within
them in severe but plausible scenarios," the BoE said.

(Reporting by Huw Jones; Editing by Christina Fincher)