Phoenix IT issues warning over £56m RBS fines

UK firms need different mind-set when it comes to ensuring their systems are resilient, argues IT services provider

The £56m in fines dished out today to the Royal Bank of Scotland (RBS) should "send a chill up the spines of British businesses", according to Phoenix IT Group.

RBS, along with NatWest and Ulster Bank, were today fined £42m by the Financial Conduct Authority for outages in 2012 that affected 6.5 million customers.

The Prudential Regulation Authority also slapped the banking group with £14m of fines for the technology glitch, which left customers without access to their accounts for up to two weeks.

Although analysts branded the fines "modest", Mike Osborne, managing director of business continuity at IT infrastructure services provider Phoenix IT, said UK businesses would look at the sanctions "and feel a shiver up their spines".

"The most striking comment made by the FCA is its commitment to ensuring banks shift away from recovering from disruptive events to resilience where systems can withstand risks," Osborne said.

"This requires a totally different mind-set not just from the banks but from the boards of most British businesses. Our experience suggests that most businesses would be unable to recover in anywhere near the time that would be expected of them by regulators or their customers."

Ian Wells, vice president of north west Europe at Veeam Software, said the fines are a reminder that IT must now "be always-on and failures are simply not acceptable anymore".

"Organisations should take this as a stark warning to modernise their legacy IT infrastructure to ensure that it can cope with growing demands for uninterrupted, 24/7 availability," he said. "For instance, whenever vital applications and services are upgraded, the business should be certain that this won't have drastic effects on the existing IT infrastructure.

Peter Roe, research director at analyst TechMarketView, described the fines as "modest".

"Although the fine is small in relation to those levied on regulatory misbehaviour, it may provide additional momentum to spending trends across the banks over the coming year," he said.