Banks fined for IT failures

Banks fined for IT failures
The Financial Conduct Authority (FCA) has fined three banks for a number of IT failings that prevented customers being able to access services.

Natwest, the Royal Bank of Scotland (RBS) and Ulster Bank were fined £42 million because of an IT incident in June 2012.

An investigation by FCA concluded that the banks had failed to take adequate steps to prevent or limit the impact of IT failures and had let down its account holders.

It was estimated the IT failings had impacted on around 6.5 million customers over a number of weeks. In many cases, the clients were unable to access their accounts or get up-to-date balances from cash machines.

Additionally, account holders had been unable to make their mortgage payments on time and some customers located overseas could not access cash.

Businesses also suffered as a result of the IT incident, with many firms not able to make payroll payments to employees.

Tracey McDermott, director of enforcement and financial crime at the FCA said: “Modern banking depends on effective, reliable and resilient IT systems. The Banks’ failures meant millions of customers were unable to carry out the banking transactions which keep businesses and people’s everyday lives moving.

“The problems arose due to failures at many levels within the RBS Group to identify and manage the risks which can flow from disruptive IT incidents and the result was that RBS customers were left exposed to these risks. We expect all firms to focus on how they ensure that they can meet the requirements of their customers when looking at their IT strategies and policies.”

A software upgrade was implemented on June 2012 but when this appeared to be unsuccessful, the banks opted to uninstall it without considering the consequences on customer services.

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