Banking regulator opens investigation into 2012 RBS IT meltdown

Royal Bank of Scotland targeted by newly formed Financial Conduct Authority

The banking regulator is to investigate the computer systems meltdown at the Royal Bank of Scotland (RBS) that last summer locked people out of their accounts for at least a week.

The crash affected customers of NatWest and Ulster Bank, both part of the RBS Group, preventing them making and receiving payments, and plunging hundreds of thousands of people into overdraft.

The Financial Conduct Authority (FCA), which took over regulation of financial services from the Financial Services Authority at the beginning of the month, has said that it has begun an "enforcement investigation" into the meltdown, which cost RBS Group £125m to fix and in compensation payments to affected customers.

The FCA did not give a deadline for when it will finish its investigation, but said that it would "reach its conclusions in due course and will decide whether or not enforcement action should follow that investigation". If it finds "systemic failures" caused the IT systems to crash, the bank could be fined and culpable individuals fined or even banned.

As a result of the IT failure, millions of NatWest and RBS customers could not access their accounts for a week, while some customers of Ulster Bank were affected for weeks.

Although there was a wide degree of speculation over the causes of the meltdown, it was eventually traced to a mis-applied software patch.

When RBS acquired NatWest in 2000 it rejected the High Street bank's IT systems in favour of its own, arguing that it would save some £300m as a result.