The UK's Raphaels Bank has been fined £1.89 million for outsourcing failures which left thousands of customers unable to use their payment cards on Christmas Eve 2015.
On 24 December 2015, Raphaels' card processor was hit by a technology problem that caused the complete failure of the authorisation and processing services it provided to the bank.
Over an eight-hour outage, 3367 customers were unable to use their prepaid cards and charge cards. In total, the card processor could not authorise 5356 transactions attempted at the POS, ATMs and online.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) say Raphaels "failed to have adequate processes to enable it to understand and assess the business continuity and disaster recovery arrangements of its outsourced service providers - particularly how they would support the continued operation of its card programmes during a disruptive event".
The incident happened just a month after the PRA fined Raphaels £1.3 million for "potentially putting its safety and soundness at risk" by failing to properly manage an outsourcing deal for its cash machines.
Sam Woods, CEO, PRA, says of the latest fines: "Firms' ability to manage outsourcing of any critical activities is a vital part of maintaining their safety and soundness. Such outsourcing is an important part of a firm's operational resilience, and particularly so in the case of Raphaels given the level of reliance on outsourcing in its business model.
"In addition, this was a repeat failing which demonstrates a lack of adequate and timely remediation. This is a significant aggravating factor in this case, leading to an uplift in the penalty."
Raphaels received separate fines of £775,100 from the FCA and £1,112,152 from the PRA after securing a 30% reduction by agreeing to resolve the matter.