LONDON – British regulators fined the Royal Bank of Scotland 56 million pounds, or about $88 million, on Thursday over a technology failure that left millions of customers unable to access their accounts for several weeks in 2012.
A software problem in June 2012 affected more than 6.5 million customers at R.B.S. and its National Westminster Bank and Ulster Bank units. Customers were unable to access their online bank accounts, make timely mortgage payments or access money overseas during the trouble, the Financial Conduct Authority said.
The regulator fined R.B.S. £42 million and the Prudential Regulation Authority, another banking regulator in Britain, fined the bank £14 million. It was the regulators’ first joint enforcement action since they were spun out of a predecessor agency, the Financial Services Authority, last year.
The Prudential Regulation Authority said that 92 percent of those affected by the technology failure were retail customers. R.B.S., which is based in Edinburgh, is 81 percent owned by the British government after a bailout during the financial crisis.
“The severe disruption experienced by R.B.S., NatWest and Ulster Bank in June and July 2012 revealed a very poor legacy of I.T. resilience and inadequate management of I.T. risks,” Andrew Bailey, the chief executive of the Prudential Regulation Authority, said in a news release. “It is crucial that R.B.S., NatWest and Ulster Bank fix the underlying problems that have been identified to avoid threatening the safety and soundness of the banks.”
The technology failure, resulting from a problem with an overnight software update, also caused R.B.S. to produce inaccurate customer account statements and some businesses were unable to make their payrolls, the Financial Conduct Authority said.
“Modern banking depends on effective, reliable and resilient I.T. systems,” Tracey McDermott, the Financial Conduct Authority’s director of enforcement and financial crime said in a news release. “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 disruption began after a software update on the night of June 17, 2012, a Sunday, regulators said.
When technology staff at R.B.S. noticed a problem with the update, they decided to uninstall it, not realizing the potential impact, regulators said. Customers were unable to access their accounts starting on June 20 of that year. Disruption to the majority of R.B.S. and NatWest systems lasted until June 26, and Ulster Bank systems were affected until July 10, the regulators said. Disruptions to other systems continued into July.
After the problems, R.B.S. said that it had begun a three-year program in 2013 to increase investment in its information technology by £750 million.
R.B.S. said it had also put in place systems that allow it to continue to process customer transactions when shutdowns occur. The company added that it had separated the overnight software maintenance by brand to avoid a similar problem across its banks in the future.
Since the 2012 trouble, R.B.S. said it had paid about £70.3 million in redress to its customers and another £460,000 to individuals and firms that were affected but were not customers.
“Our I.T. failure in the summer of 2012 revealed unacceptable weaknesses in our systems and caused significant stress for many of our customers,” Philip Hampton, the chairman of R.B.S., said in a news release. “As I did back then, I again want to apologize to all customers in the U.K. and Ireland that we let down two and a half years ago.”
The bank said it also cut bonuses by about £6 million in 2012 as a result of the technology failure.