This summer's IT meltdown at RBS damaged public confidence in Britain's banks, which should all now be checking their systems to make sure that such a failure cannot be repeated, says Treasury Committee chairman Andrew Tyrie MP.
On 19 June, routine systems maintenance at the bank went wrong, causing the automated batch processing software to malfunction. The problem was quickly fixed but the knock on effects caused chaos for millions of RBS, NatWest and Ulster Bank customers as balances failed to update and payments to go through.
Parliament's Treasury Committee has now published letters between Tyrie and RBS chief executive Stephen Hester in the weeks following the initial glitch.
Responding to questions from Tyrie, Hester says, in a 6 July letter, that the mangled software upgrade was managed and operated by a team based in Edinburgh. On the question of whether "staff savings or outsourcing" of IT functions contributed, Hester says only that "the impact on business resilience of any cost saving measures" will be looked into as part of an independent investigation.
That investigation - still ongoing - will look into risk management systems, contingency planning and the chances of similar problems affecting other parts of the business.
In the letter Hester also promises to pro-actively refund the millions of customers hit by the meltdown. A pot of £125 million has been put aside for this with details on the Ulster Bank package, including £20 compensation for all those hit, revealed last week.
Tyrie says the issue damaged banking's reputation but praised RBS's response, saying: "This episode, and the initial confusion surrounding it, did little for public confidence in our banks. Mr Hester took swift action to remedy the failure; he also took full responsibility on behalf of RBS. He did the right thing."
The committee has also published letters between Tyrie and FSA chairman Adair Turner who confirms that, in addition to RBS's own investigation, the watchdog requires a separate review from an "independent skilled person".
Turner also assures Tyrie that the RBS problem "did not present immediate risks to the central payment system infrastructure".
Concludes Tyrie: "The Committee will doubtless want to look closely at RBS' final report when it is published to ensure that any systemic weaknesses and governance issues are adequately addressed, both by the bank and by the FSA. Every bank should be checking its IT systems. We need to have confidence that such a failure cannot happen again."
The FSA is understood to have has sent letters to the nine largest banks and building societies in the UK requesting details of their IT contingency plans. The letter also demands the names of senior managers who could be held responsible in the wake of a major systems failure.
Finextra verdict: Wishful thinking from Andrew Tyrie. No bank can consider itself impervious to IT failure. The RBS meltdown allegedly occurred on an old batch-based mainframe system operated by junior staff inexperienced in its quirks. RBS is no exception in this regard. In fact, with most banks having to run, repair, and replace a legacy of patched-up IT programmes - some dating back decades - technology failures like those experienced by RBS are likely to become more commonplace.