UK banks may have to spend nearly £1bn on upgrades to their computer systems over the next five years to enable quicker processing of compensation claims, the Financial Services Authority (FSA) has said.
The regulator said more investment in IT was needed to support its compensation scheme, which currently protects savings worth up to £50,000.
The FSA wants banks to be able to produce a list of all customers’ deposits within 48 hours of the institution failing. The FSA estimates that banks will need to spend £892m updating their systems to meet this requirement.
“It is imperative consumers understand and trust that they will be reimbursed if a bank, building society or credit union fails,” said FSA chief executive Hector Sants.
Research firm TowerGroup welcomed the proposals but said the updates are simply good housekeeping.
“Data cleansing, obtaining a single view of the customer, storage and retrieval of data are all simple issues where the banks have failed frequently to apply resources to good effect,” said TowerGroup research director Bob McDowall.
Microgen, a business intelligence firm that works with a large number of UK banks, said customer systems at many institutions are not up to the job.
“At present there is still much reliance on manual processes and spreadsheets – a fact that can only have exacerbated the current crisis – and this has to be addressed for the industry to get back on an even keel,” said Microgen chief operating officer David Sherriff.