Hester vows to regain trust of customers after IT farce
RBS Group chief executive Stephen Hester has said he is determined to “personally lead the process” of regaining the trust of customers hit by NatWest’s IT meltdown, which originated in Edinburgh.
In a letter to Treasury Select Committee chairman Andrew Tyrie, Mr Hester gave further details of how the incident happened and promised a “full and detailed investigation”.
He said the banking group’s initial findings suggest the problems were created when maintenance on its systems, which are managed and operated by its team in Edinburgh, created an error on Tuesday last week which stopped people’s accounts updating properly.
He said the knock-on effects were “substantial” and the problem was made worse because the team could not access a record of the transactions that had been processed up to the point of failure.
A “substantial backlog” was created because the group, which processes 20 million transactions a day, had to try to pinpoint the moment at which processing had stopped.
Mr Hester, who has announced that he will forgo his bonus this year because of the problems which have also hit Royal Bank of Scotland and Ulster Bank, said it was not clear why the transaction record was not available.
The problems have left some customers short of cash and even forced one man to spend a weekend in prison when his bail money was not available.
Bank of England Governor Sir Mervyn King said yesterday that Britain’s banks generally needed a “real change in culture”.
The Government is facing mounting calls for an inquiry into banking culture and practices after a fresh mis-selling scandal capped a nightmare week for the industry.
Opposition leader Ed Miliband pushed for a probe after the FSA uncovered “serious failings” in the sale of complex financial products to small businesses, just days after the Barclays rate-rigging affair emerged.
Taxpayer-backed Royal Bank of Scotland also confirmed it was being investigated for manipulating the rates at which banks lend to each other.
Sir Mervyn said: “From excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rates and now news of yet another mis-selling scandal we can see we need a real change in the culture of the industry.”
The Financial Services Authority revealed earlier that Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group had agreed to pay compensation to customers mis-sold interest-rate hedging products. Some 28,000 of the products have been sold since 2001.
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