RBS to receive ‘record fine’ for IT fiasco

The Royal Bank of Scotland (RBS) is set to receive a ‘record’ fine from the UK’s financial watchdog for an IT failure in 2012 which prevented customers from accessing funds.

Share

The Royal Bank of Scotland (RBS) is set to receive a ‘record’ fine from the UK’s financial watchdog for an IT failure in 2012 which prevented customers from accessing funds.

The incident resulted in accounts being blocked for 12 million customers of RBS and its subsidiaries such as Natwest and Ulster Bank. The outage was believed to have been caused by a glitch during an update to the bank’s CA7 batch processing systems, which took staff weeks to fully resolve.

The Financial Conduct Authority (FCA) is now set to hand out a financial penalty worth several tens of millions of pounds, after coming the end of an investigation into the systems failure, Sky News sources have claimed. This would make it one of the largest fines handed out to a bank that is not related to financial misconduct.

The bank had previously earmarked £175m to reimburse customers who had suffered losses as a result of the outage.

The FCA began its RBS investigation last year, with the bank's outdated infrastructure cited as the main cause of the disruption. 

Following a subsequent outage in December 2013, RBS CEO Ross McEwan pledged to spend on improving IT systems. 

”For decades, RBS failed to invest properly in its systems. We need to put our customers' needs at the centre of all we do. It will take time, but we are investing heavily in building IT systems our customers can rely on,” he said.

The bank has since undergone a programme of simplification and modernisation of its applications and infrastructure, and announced more recently that it would spend £1 billion on improving resiliency and developing digital technologies. 

RBS completed the separation of batch processing systems across the individual parts of its business in May, in order to prevent recurrences of the 2012 outage.

With other banks continuing suffering outages, the regulator has begun to assess the resilience of ageing IT systems used by all UK lenders.

Promoted