Share

RBS gets $88m fine for financial crash

London - Royal Bank of Scotland (RBS) has been fined £56m ($88m) by Britain's financial regulators for a system crash in 2012 that left millions of customers unable to make or receive payments.

The 2012 outage, caused by a botched software upgrade, affected 6.5 million customers of RBS, NatWest and Ulster Bank in Britain for several weeks and raised questions about the resilience of the group's technology.

Some industry sources say RBS's systems are outdated and made up of a complex patchwork of systems after dozens of acquisitions.

The penalties imposed on Thursday comprised a £42m fine from the Financial Conduct Authority (FCA) and a £14m fine from the Prudential Regulation Authority (PRA).

The two regulators conducted a joint investigation into the matter and the fine from the PRA is the first it has imposed since its creation in April 2013. They concluded that RBS's systems and controls had been inadequate.

PRA chief executive Andrew Bailey said the incident "revealed a very poor legacy of IT resilience and inadequate management of IT risks".

"It is crucial that RBS, NatWest and Ulster Bank fix the underlying problems that have been identified to avoid threatening the safety and soundness of the banks," he said.

To prevent a recurrence of the problems, RBS has said it will invest an extra £750m by the end of 2015 to enhance the security and resilience of its IT systems.

"I am confident that the progress we have made ... has made RBS better able to provide the services our customers expect," said chairperson Philip Hampton.

The group suffered a further technology outage in December last year, which left more than 1 million customers unable to withdraw cash or pay for goods on one of the busiest shopping days of the year.

Following that episode, chief executive Ross McEwan admitted RBS - which is 80%-owned by the British government - had neglected its technology for decades.

However, the FCA concluded that the 2012 incident was not the result of the bank's failure to invest sufficiently in its IT structure. It noted that RBS spends over £1bn annually to maintain its IT infrastructure.

The incident had already cost the bank £175m in compensation for customers and extra payments to staff after the bank opened branches for longer in response.

The bank said £6m was taken off its wage bill following the incident as a result of some staff forfeiting pay and bonuses, including bonuses waived by former RBS chief executive Stephen Hester and Ulster Bank CEO Jim Brown.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.09
-1.0%
Rand - Pound
24.05
-0.7%
Rand - Euro
20.58
-0.5%
Rand - Aus dollar
12.39
-0.3%
Rand - Yen
0.13
-0.9%
Platinum
894.64
-0.3%
Palladium
992.99
-0.9%
Gold
2,197.50
+0.1%
Silver
24.44
-0.8%
Brent Crude
86.09
-0.2%
Top 40
67,880
+0.3%
All Share
74,091
+0.3%
Resource 10
56,315
+1.2%
Industrial 25
103,611
+0.3%
Financial 15
16,459
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders