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2012 RBS Group computer system problems

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The 2012 RBS computer system problems are technical issues currently affecting computers run by The Royal Bank of Scotland Group, including NatWest and Ulster Bank, from 19 June 2012.

Cause

A software update was applied on 19 June 2012 to RBS' CA-7 software[1] which controls the payment processing system. It then turned out that the update was corrupted.[2][3] Customer wages, payments and other transactions were disrupted.[3][4] Some customers were unable to withdraw cash or see bank account details.[2][5] Others faced fines for late payment of bills because the system could not process direct debits.[4]

Stephen Hester, CEO of the RBS Group, said that the problem was caused by a software upgrade.[6] Unite union leaders criticised Hesters' management of the episode, but Hester denied that outsourcing of IT services to India was a factor in the problem, saying that the bank's IT services were mostly based in Edinburgh.[7] A spokesman for RBS group said that the problem had occurred in the UK.[8]

Impact

As a result of the error, over 1,200 branches of RBS and NatWest opened on a Sunday for the first time, in order to deal with customer complaints.[8] On the Monday, over 1,000 branches opened for extended hours. [8] As well as this, the number of phone staff was doubled.[9]

On 26 June, RBS admitted that some transactions were still affected by the problem.[10] Ulster Bank said on 27 June that it didn't expect full services to restored until the start of the following week, but that it hoped that the automatic payments backlog should be cleared by the weekend.[11][12] In one case, a cancer charity was unable to transfer funds as arranged to a family whose daughter was on life support and alternative arrangements had to be made with the bank for the transfer.[13] NatWest customers on an online forum were worried that they could not pay bills and that they might incur penalties because of the disruption.[14] On Friday 22 June a man was granted bail at Canterbury Crown Court on condition a surety was to be paid before his release, but the computer failure prevented the transfer of his bail money, leading to him remaining in a remand cell over the weekend.[7][15] A phishing scam targeting customers of NatWest affected by the problems has been discovered.[16]

Reaction

United Kingdom

The Financial Services Authority asked other banks to treat customers of RBS fairly and also demanded a complete account of the problem.[7] Lord Oakeshott called for the bank to be broken up.[7] Shadow Chief Secretary to the Treasury, Rachel Reeves, said that it was "absolutely imperative" that the bank got the situation under control.[17] Sir Mervyn King, Governor of the Bank of England, called for a full investigation by the Financial Services Authority and told the Treasury Select Committee that he had been in very close contact with senior RBS staff over the weekend.[10]

Ireland

Taoiseach, Enda Kenny, and Minister for Social Protection, Joan Burton, criticised Ulster Bank for the situation which has affected some 30,000 social welfare recipients.[18] Senator Lorraine Higgins called the situation a "fiasco" and said Ulster Bank should ensure that customers credit ratings weren't affected, which Ulster Bank replied it would.[11] The Irish Bank Officials' Association said that an agreement had been made that overtime would be voluntary and that Ulster Bank workers would be paid appropriately for extra work.[11]

The Irish Payment Services Organisation advised customers to keep records of how they were affected and to contact the Financial Services Ombudsman if not satisfied.[11] There was press criticism for Ulster Bank's perceived downplaying of the issue in the early stages.[19]

RBS Statements

On the first Monday after the start of the problems, RBS said that their computers were operating normally, but that Stephen Hester had to send a senior colleague to Dublin to deal with the situation in Ulster Bank.[7] On the Monday, some customers still could not see up to date account details.[5]

On 27 June RBS announced that it had cancelled its corporate hospitality at Wimbledon as it would be inappropriate under the circumstances.[11]

References

  1. ^ Arthur, Charles (25 June 2012). "How NatWest's IT meltdown developed". The Guardian. Retrieved 25 June 2012.
  2. ^ a b "NatWest computer glitch 'fixed but backlog remains'". BBC News. 23 June 2012. Retrieved 25 June 2012.
  3. ^ a b "NatWest customers still unable to see bank balances on sixth day of glitch". The Daily Telegraph. 24 June 2012. Retrieved 25 June 2012.
  4. ^ a b Ensor, Josie; Hall, James (23 June 2012). "NatWest computer glitch 'fixed but backlog remains'‎". The Daily Telegraph. Retrieved 25 June 2012.
  5. ^ a b Peston, Robert (25 June 2012). "Is outsourcing the cause of RBS debacle?". BBC News. Retrieved 26 June 2012.
  6. ^ "RBS boss says software upgrade caused problems". BBC News. 25 June 2012. Retrieved 25 June 2012.
  7. ^ a b c d e Treanor, Jill (25 June 2012). "RBS boss says outsourcing not to blame for computer glitch". The Guardian. Retrieved 25 June 2012.
  8. ^ a b c Hall, James (25 June 2012). "RBS glitch 'well on the way' to being fixed, says chief". The Daily Telegraph. Retrieved 25 June 2012.
  9. ^ Adetunji, Jom (23 June 2012). "NatWest 'technical glitch' fixed, says spokesman". The Guardian. Retrieved 25 June 2012.
  10. ^ a b Treanor, Jill (26 June 2012). "RBS glitch needs full investigation, says Mervyn King". The Guardian. Retrieved 26 June 2012.
  11. ^ a b c d e Carroll, Steven (27 June 2012). "Ulster Bank says no one will be 'out of pocket'". The Irish Times. Retrieved 28 June 2012.
  12. ^ Bachelor, Lisa (27 June 2012). "RBS and NatWest: continuing IT problems affect Ulster account holders". The Guardian. Retrieved 28 June 2012.
  13. ^ Hall, James (25 June 2012). "NatWest computer glitch: payment to keep cancer girl on life support blocked". The Daily Telegraph. Retrieved 25 June 2012.
  14. ^ Davies, Caroline (24 June 2012). "NatWest customers fear running out of food and electricity". The Guardian. Retrieved 25 June 2012.
  15. ^ Hall, James; Rayner, Gordon (25 June 2012). "RBS computer failure condemns man to spend weekend in the cells". The Daily Telegraph. Retrieved 26 June 2012.
  16. ^ Evans, Richard (25 June 2012). "NatWest customers targeted by 'phishing' email scam". The Daily Telegraph. Retrieved 25 June 2012.
  17. ^ Treanor, Jill (24 June 2012). "RBS promises to compensate customers affected by computer glitch". The Guardian. Retrieved 26 June 2012.
  18. ^ Powers, Mark; McGreevy, Ronan; Hennessy (23 June 2012). "Politicians criticise Ulster Bank over crash". The Irish Times. Retrieved 25 June 2012. {{cite news}}: More than one of |first1= and |first= specified (help)
  19. ^ "Serious questions that Ulster Bank must answer". Irish Independent. 25 June 2012. Retrieved 25 June 2012.
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