RBS facing fine of 'tens of millions of pounds' for 2012 IT failure

IT failure left customers without access to money for several days and caused payments chaos

The Royal Bank of Scotland (RBS), which also owns the NatWest Bank and Ulster Bank, is facing a fine of "tens of millions of pounds" over an IT failure in 2012 that left customers without access to their money for several days, and caused payments to bounce.

The Financial Conduct Authority (FCA) reportedly told RBS in October that it would be fined a record-breaking amount for the failures, given the serious nature of the IT glitch. It follows a cost of £175m that the bank put aside to reimburse customers who had suffered losses, up from an initial estimate of £125m.

That is according to sources at Sky News, who claim that enforcement proceedings have already commenced and that the bank has been given 28 days to respond. However, RBS will be eligible for a 30 per cent discount on the proposed penalty if it agrees to settle within those 28 days - rather than appeal.

Sky News claims that its sources had put the size of the fine that RBS will face at "several tens of millions of pounds", which would make it one of the largest ever levied against an organisation for a breach unrelated to market manipulation.

RBS is also facing separate sanctions from the Central Bank of Ireland over the same IT failures that affected customers in Ireland, too.

Following the IT failure, the FCA decided to examine the robustness of banks' IT systems as one of its priorities for this year - especially following a second IT failure at RBS in December last year and a number of minor IT glitches that have affected other banking groups in the UK.

The FCA's checks will include finding out how engaged bank boards are with their organisation's IT, as well as whether directors are sufficiently knowledgeable to challenge executives over IT issues.

RBS also said that it will invest more than £1bn in improving its ageing IT infrastructure over the next three years.

Neither RBS, nor the FCA, were prepared to comment over the fine.