RBS prepares to be fined tens of millions pounds over IT breakdown

Royal Bank of Scotland faces a fine of tens of millions of pounds as early as this week over the collapse of its IT systems that locked millions of customers out of their accounts for days.

The bank, which is 81%-taxpayer owned, is braced for a penalty from the Financial Conduct Authority for the unprecedented systems meltdown in 2012, which also affected customers of its NatWest and Ulster Bank brands.

The penalty will be a further blow to RBS’s reputation, which took a renewed battering last week over the bank’s involvement in manipulating the £3.5tn-a-day currency markets. RBS paid £400m to the FCA and a US regulator over a failure of internal controls which allowed traders to act together to move currency prices for profit. It was among six banks which were fined £2.6bn by regulators.

The scale of the penalty for IT failings will be less but will revive memories of the chaos caused by the IT outage and leave RBS open to allegations of incompetence.

Ireland’s central bank last week fined RBS £2.7m for the fiasco, which hit Ulster Bank particularly hard, leaving some customers without banking services for almost a month.

Neither RBS nor the FCA would comment on the latest potential fine, but the bank said last month that the regulator had begun “enforcement proceedings” in relation to its investigation, which began in April 2013.

In 2012, RBS put aside £175m to compensate customers and has not quantified the penalty it expects to receive from the FCA.

Powered by Guardian.co.ukThis article was written by Jill Treanor, for The Observer on Sunday 16th November 2014 00.05 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010


JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News