20th November 2014
The Royal Bank of Scotland (RBS) has been hit with a £56m fine by UK regulators as a result of IT failures in 2012.
The 80% government owned bank has agreed a penalty of £42m with City watchdog, the Financial Conduct Authority (FCA), and £14m with the Prudential Regulation Authority (PRA), which oversees banks.
The fine follows last week’s penalty for F/X rate rigging.
As a result of the breakdown in systems two years ago at RBS, and its subsidiaries NatWest and Ulster Bank, millions of customers were left unable to access their accounts. The failure affected more than 6.5m UK customers for several weeks.
The FCA said the actual cause of the IT incident was a software compatibility problem with the underlying issue being the banks’ failure to put in place adequate systems and controls to identify and manage their exposure to IT risks.
Philip Hampton, chairman of RBS, said: “Our IT failure in the summer of 2012 revealed unacceptable weaknesses in our systems and caused significant stress for many of our customers. As I did back then, I again want to apologise to all customers in the UK and Ireland that we let down two and a half years ago.”
He added however that he is now confident in the progress the firm has made in increasing the resilience of its systems.
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.”
The banks agreed to settle at an early stage of the investigation and therefore qualified for a 30% discount.