The Financial Conduct Authority (FCA) today announced a review into how firms are using third-party IT suppliers, following a number of high-profile failures in 2018.
In the regulator’s business plan for 2019/2020, the FCA said around 17% of the incidents firms reported to it were caused by IT failures at third-party suppliers.
Last year high-street bank TSB suffered a prolonged period of customer disruption after a botched customer data transfer which hit 1.9 million customers. While wrap platforms Aviva and Aegon suffered from rocky platform technology migrations last year which hit IFAs and their customers.
The FCA said in its business plan that although most firms it surveyed rated themselves highly for their ability to manage system changes, the FCA’s incident data shows system upgrades and data transfers were the single highest cause of disruption to services.
The regulator said although firms may be outsourcing technology, the responsibility must remain with the firm itself.
‘We will continue the work programme to better understand the current outsourcing and third-party service provider environment, and identify the sectors and business services which are highly dependent on them,’ the regulator said.
‘We will carry out a review with a selection of firms to better understand their current approaches and the causes of problems. We will consider how best to integrate our expectations into firms’ practices as part of their wider resilience agenda.’