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RBS faces record FCA fine for 2012 IT failure

Royal Bank of Scotland is facing a record fine from the FCA for an IT failure in 2012 that left customers unable to pay bills or access cash from their accounts.

Sky News reports the regulator has told RBS it must pay a fine worth tens of millions of pounds, which would be a record for a systems-related problem.

In June and July 2012, a software upgrade saw RBS, NatWest and Ulster Bank customers face disruption to account services for two weeks. That year RBS made a provision of £175m in compensation for those affected.

In April 2013, the FCA announced it was investigating RBS over the failure.

In its half-year results published last week, RBS said enforcement proceedings have commenced.

Separately, the Central Bank of Ireland initiated an investigation into the failure and has issued enforcement proceedings against Ulster Bank Ireland.

RBS says in its results that Ulster Bank anticipates entering into settlement discussions with the CBI before the end of the year.

According to Sky News, sources put the scale of the FCA fine at “several tens of millions of pounds”, which would rank it among the largest ever imposed by the regulator for offences unrelated to the manipulation of financial markets.

Last December, RBS suffered another systems outage on the busiest online shopping day of the year, the third time in about 18 months that such a problem had prevented customers from using cards, cash machines and online banking services.

RBS has since pledged to invest more than £1bn in its digital capabilities and IT systems during the next three years.

RBS and the FCA declined to comment.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. If Martin Wheatley makes this fine around the £118 million mark he can pay us back, for what the FSA over charged us

  2. Alice in Wonderland or Franz Kafka? One quasi Government body fining another and the taxpayer pays. You couldn’t make it up.

  3. “In a way, the world-view of the Party imposed itself most successfully on people incapable of understanding it. They could be made to accept the most flagrant violations of reality, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening.”
    George Orwell, 1984

  4. Not that I am a lover of the banks, but if the bank paid redress/compensation to its customers so they were put in a position had the IT problem not occurred, why would the FCA deem a fine was being appropriate at all. They have now fixed the problem so surely that should be sufficient

  5. @Marty – that’s the same sentiment I made some time back, and one that I believe should be re-iterated until the blind, deaf and incompetent (or is that incontinent) Government officials take some notice. Its the consumer that has been inconvenienced so it is the consumer that should be recompensed, not only for the loss, but a little bit more on top for good luck.
    And the cost should not come from the shareholder but from the pay pot of the senior management of the firm – if that can’t be done practically in one year it should be spread.
    I totally fail to see why the Regulator or the Government should benefit from these acts. Pay the Regulatory Staff a decent salary for doing a decent job (comments on that should be kept printable) but surely their basic function is to regulate. In this sort of case they are not even regulating, since the problem was blatantly public. Their only function would be to ensure that the Bank did compensate those who were inconvenienced – I don’t really see that as a difficult exercise.

  6. @Marty – that’s the same sentiment I made some time back, and one that I believe should be re-iterated until the blind, deaf and incompetent (or is that incontinent) Government officials take some notice. Its the consumer that has been inconvenienced so it is the consumer that should be recompensed, not only for the loss, but a little bit more on top for good luck.
    And the cost should not come from the shareholder but from the pay pot of the senior management of the firm – if that can’t be done practically in one year it should be spread.
    I totally fail to see why the Regulator or the Government should benefit from these acts. Pay the Regulatory Staff a decent salary for doing a decent job (comments on that should be kept printable) but surely their basic function is to regulate. In this sort of case they are not even regulating, since the problem was blatantly public. Their only function would be to ensure that the Bank did compensate those who were inconvenienced – I don’t really see that as a difficult exercise.

  7. Gosh, it does look as though I am repeating it ad nauseam

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