FCA Urges Banks to Link C-Suite Bonuses to IT Performance
Following a spike in banking technology failures, the UK’s Financial Conduct Authority (FCA) has urged banks to reduce the bonuses of technology leaders if IT failures in their organisations impact customers.
Speaking to the Commons Treasury committee, FCA chief Andrew Bailey said banks should link bonuses to operational resilience themselves or the FCA will enforce the measure.
As the complexity of financial firms’ IT operations increases with the introduction of new technologies, the FCA has spotted a growing trend of technology outages impacting banking customers.
Banks are being forced to replace outdated systems because of growing competition from the technology used by challenger banks and fintechs, as well as changing customer banking habits, with a mass migration to digital channels. This is often the cause of IT failures at the banks, according to Bailey.
A report from the financial authority in November revealed that about 600 technology outages were reported to the FCA between October 2017 and September 2018. This was a 138% increase over the previous year. The FCA cited failed IT migrations as the leading cause.
Bailey told the Treasury committee: “We expect banks’ policies on variable remuneration to reflect operational resilience. They have to – if they don’t, we will act.”