“IT issues” seem to have been a very common theme for the banking industry in 2018. The introduction of a new computer system at TSB in April meant that 1.9 million customers lost access to their online accounts. Then, in September, Royal Bank of Scotland, NatWest and Ulster Bank customers were locked out of their accounts for a morning without explanation. And these are just a few of the issues that the personal finance industry has encountered this year. But if you’re one of the many customers affected by the recent banking IT problems, what can you do?
Where are the IT problems coming from?
Although most big banks are very cagey about their IT systems, these very public failures have exposed some serious tech issues in the sector. Almost every significant name in personal finance has had issues over the last 12 months – Barclays customers were locked out of their accounts in September and IT issues at Co-operative Bank and Cashplus have also caused serious problems. As the giants of the banking sector struggle to keep up with the more agile, smaller competitors that are entering the market, these IT issues seem to be the result.
Why are IT problems no longer acceptable?
As more banks start trying to drive customers towards doing everything online or via an app, it’s become clear that such extensive IT issues are simply not acceptable. Nicky Morgan MP, who is head of the Treasury Committee, has written to RBS and Barclays demanding an explanation for the problems that arose. She has also asked these huge financial institutions to pay compensation to the customers who lost out as a result of the IT failures. In her letter to RBS and Barclays, Nicky Morgan said,
“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. High street banks justify the closure of their branch networks on the basis that they are providing a seamless online and mobile phone banking service. These justifications carry little weight if their banking apps and websites cannot be relied upon.”
What kind of losses can arise from IT problems?
- Basic costs – for example, fees or interests charged because payments were missed or late as a result of IT problems. Failing to make mortgage or credit card payments or going over your overdraft limit are two obvious examples. Or may be you had to borrow cash from elsewhere to cover your costs.
- Additional costs – for example, you may have had to spend money on phone calls to try to sort out issues or even legal fees if a large purchase – such as a home – was delayed.
- Non-financial losses – you could be compensated for trouble and stress, for example if missing a significant payment triggered a debt collection process that otherwise would not have been started.
- Losses arising from fraud – for example, if you have been contacted by a fraudulent third party claiming to be the bank during the IT issues and lost money as a result.
Compensation for IT problems
In her letter to the high street banking giants, Nicky Morgan also raised the issue of compensation for customers who had lost out. Guidance from the Financial Ombudsman sets out a number of steps that anyone can take if issues have arisen as a result of IT faults that are the responsibility of a bank.
The first step is to make contact with the bank. This could be via email, phone call or letter. It’s usually a good idea to make sure that you have a record of the contact made so that you can refer back to this later. When you contact the bank be clear about:
- The date and time of the IT issues you’re referring to
- How you were affected because of the IT issues that arose
- What losses you suffered
- How you want the bank to rectify the situation
You’ll need to give the bank at least 15 days to respond to your complaint and after that you can get in touch with the Financial Ombudsman.
What can the Financial Ombudsman do?
- Collate the total number of complaints to get perspective on how many people were affected, and how
- Look at the facts of the case, ask questions and demand answers from the bank
- Assess whether the consumer has been treated fairly by the bank
- Require the bank to put a situation right if the Financial Ombudsman determines that they have done something wrong and the consumer has been affected negatively as a result. In practice this could mean getting the bank to cover any losses that have been suffered and also ordering them to pay compensation where there has been inconvenience caused
- Order corrections to be made to a credit file where negative additions have been made as a result of IT bank issues
Ever since an RBS software update locked millions of customers out of their accounts in 2012, some for up to a month, the focus has been on improving IT issues in the finance sector. We have now reached a point where banks must raise their standards or risk high volumes of compensation claims as a result.
- What’s meant by “Open Banking” and why does it matter
- The future of banking
- How technology is changing the face of banking