Belfast Telegraph

Republic watchdog fines Ulster Bank £2.7m over IT meltdown

By Nevin Farrell

One of Northern Ireland's leading banks is bracing itself for a massive fine from financial regulators in the UK after its IT meltdown.

The Ulster Bank's operation in the Republic of Ireland has been hit with a £2.7m fine by watchdogs.

It was the highest ever imposed by the Central Bank.

The fine is in response to weeks of problems experienced by almost a million Ulster Bank customers across the island who could not access their accounts after a bank software upgrade on June 19, 2012.

Ulster Bank has already paid out more than £18m in compensation to the 300,000 customers affected in Northern Ireland by the systems disaster.

Ulster Bank said it accepted the punishment.

The UK's Financial Conduct Authority (FCA) is carrying out its own investigation into the computer glitch and it is anticipated it will order RBS, Ulster Bank's parent company, to be fined.

A FCA spokesman confirmed it had not imposed any sanction so far and its probe was ongoing. He said it was not commenting on the fine ordered by the Central Bank of Ireland.

The Central Bank fined Ulster Bank €3.5m (£2.7m) "in relation to IT and governance failings by Ulster Bank that resulted in approximately 600,000 customers being deprived of essential and basic banking services over a 28 day period during June and July 2012". It said the fine and reprimand were in addition to a redress scheme required and overseen by the Central Bank under which Ulster Bank has paid out around €59m (£46m) to affected customers.

It said it "reflects the seriousness with which the Central Bank views the failings of the firm (Ulster Bank) and the Central Bank's determination to ensure that customers have access to core banking services without disruption".

Ulster Bank chief executive Jim Brown said: "Today's announcement from the CBI brings to a close the regulatory investigation into our IT systems incident in 2012."

He added: "The incident, which occurred following a software upgrade failure in the system used across the bank, resulted in serious disruption across Ulster Bank and impacted our customers for an unacceptable period of time. Our customers need to be able to rely on our systems and in this instance we let them down.

"We accept the CBI's finding that our governance arrangements and controls over our outsourced IT arrangements to RBS were not sufficiently robust and that this led to a prolonged failure which caused significant inconvenience to our customers," he said.

"We have put in place an enhanced operational risk framework, significantly enhancing our capability in this area and improved our way of working with RBS to ensure that we are better placed to support our customers.

"The inconvenience that was caused to our customers went to the heart of the trust they have in us as a bank and we are quite clear that they should never have to experience anything like this ever again."

Factfile

The Central Bank of Ireland said the impact of the IT incident on the Ulster Bank's customers included:

  • Late processing of payments in and payments out of accounts
  •  Inability to access ATMs/cash
  • Late transfers of payments against customers' credit card balances
  • Incorrect credit and debit interest on accounts/cards;
  • Duplicative payments
  • Customers' inability to honour financial commitments
  • Inability to pay for goods and services
  • Inability to use online banking
  • Inability of commercial customers to use the banking system and inability to view account balances

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