FCA launches belated RBS probe 10 months after MP demands
Treasury Select Committee wrote to then FSA chairman Lord Adair Turner on 27 June 2012 over IT failure.
The Financial Conduct Authority has launched a belated enforcement investigation into last year’s IT failures at the Royal Bank of Scotland, which will determine whether or not the state-owned bank should be hit with a financial penalty.
Hundreds of thousands of customers with bank accounts provided by RBS could not access their money for extended periods throughout late June and July 2012, due to problems with its IT infrastructure.
The FCA said in a statement: “The FCA will reach its conclusions in due course and will decide whether or not enforcement action should follow that investigation.”
Last year, the Treasury Select Committee warned that the problems caused by RBS’s IT failures threatened to “infect” the rest of the banking system.
On 27 June, Andrew Tyrie, chairman of the TSC, wrote to Lord Adair Turner, then chairman of the Financial Services Authority, demanding to know how the regulator would deal with issues such as this and what responsibility lies within the banks to report failures to the regulator.
Mr Tyrie also demanded to know who will be responsible for monitoring such issues when the new regulatory structure, which is now in force, comes into play.
In his response, Lord Turner said that the PRA, the new unit covering prudential regulation, will ensure that firms have “good quality risk management and controls and are well-run and well-governed”.
He said that if a firm suffered a lengthy inability to access payment systems such as Bacs, this could cause reputational damage in the firm with potentially “destabilising consequences”, such as a “potential drain” on liquidity through customers removing their deposits.
Lord Turner also said that conduct regulator the FCA’s strategic objective - ensuring that the UK financial markets function well - will also require it to be concerned about an issue such as the RBS incident.
The FCA would be particularly interested in communications with customers, contingency arrangements and, in due course, appropriate redress, Lord Turner said.
In addition, the FCA would be concerned that such an incident did not call into question the integrity of the UK financial system through the disorderly operation of banking facilities.