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Finance bods probe RBS over bank-crippling IT cock-up

Bank could face fine for outsourced system collapse

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A banking watchdog has launched an investigation into the IT meltdown that crippled bank accounts held by millions of NatWest, RBS and Ulster Bank customers in June last year.

The Financial Conduct Authority (FCA) has begun a probe into the disaster, which saw the RBS group unable to process payments following a catastrophic failure during an upgrade of batch-processing software.

Around 16.9 million customers in the UK were prevented from accessing their accounts for or withdrawing money from ATMs, sometimes for several weeks. Others didn't receive their salary or were fined due to unpaid bills.

Stephen Hester, RBS head honcho, magnanimously gave up his whopping bonus following the scandal and the bank had to pay out £175m to restore its systems to working order.

In a statement, the FCA said:

The Financial Conduct Authority has started to conduct an enforcement investigation into the IT failures at RBS which affected the bank’s customers in June and July 2012. The FCA will reach its conclusions in due course and will decide whether or not enforcement action should follow that investigation.

The FCA replaced the Financial Services Authority, which was closed down following the banking crisis and the perceived failure of light-touch regulation. It has the power to impose unlimited fines.

Last year The Reg broke the story that a serious error by an “inexperienced operative” during a software upgrade on 19 June had caused the IT apocalypse at RBS.

We also found job adverts that appeared to show some of the team responsible for the cock-up had been recruited in India after RBS slashed its IT department in the UK.

A problem with the CA-7 batch processing software used by RBS to process routine tasks without human input was responsible for the disaster.

According to a whistleblower who worked with the bank for several years, an inexperienced, outsourced employee unwittingly made a huge error while carrying out the relatively straightforward tasking of backing up an upgrade to the CA-7 software.

RBS has now promised to throw cash at its IT systems in a bid to stop a similar disaster happening again. A spokesman said:

Last summer's IT failure was unacceptable. We have already made significant improvements and over the next three years will invest hundreds of millions in our systems.

We will be working closely with our regulators in the UK and the Republic of Ireland. Our customers deserve a service they can rely on 100% of the time and that is what we want to provide.

Just last month, RBS customers were smacked by yet another glitch in The Royal Bank of Scotland's systems, when millions of people were locked out of their accounts.

Ordinary people were badly affected by the disaster last summer. Some people were unable to buy food. Others were trapped abroad or imprisoned. One particularly unlucky seven-year-old cancer patient even faced having her life support machine switched off in a Mexican hospital.

Do you know anything about the latest RBS banking meltdown? Get in touch with El Reg and let us know. ®

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