THE Royal Bank of Scotland has failed to invest in basic customer infrastructure “for decades”, its chief executive admitted yesterday, as he issued an abject apology for a crash in its IT system which left hundreds of thousands of customers unable to access their money.
In the latest embarrassing episode for the largely state-owned bank, Ross Mc-Ewan warned it would “take time” to fix the internal problems, as he conceded it was “unacceptable” that 750,000 customers of RBS, NatWest and Ulster Bank had been blocked from access to their own money.
The glitch, which hit customers for three hours after 6:30pm on Monday evening, was all the worse for taking place on the busiest online shopping day of the year, when thousands of people are buying gifts for Christmas.
As news spread on Twitter about the computer troubles, some RBS customers recounted having to leave goods at supermarket check-outs, or finding themselves unable to pay for petrol.
According to some customers, the “cyber-Monday” glitch was still causing problems yesterday, 24 hours after problems first arose. Although cash machines were working, some people found their balances were incorrect or payments had disappeared.
An RBS spokeswoman confirmed that more customers had called the bank yesterday to complain about continuing problems. However, she said the “vast majority” of customers were now experiencing a “good service”.
Responding to the criticism from customers yesterday, Mr McEwan, who became the bank’s chief executive on 1 October, said: “Last night’s systems failure was unacceptable. Yesterday was a busy shopping day and far too many of our customers were let down, unable to make purchases and withdraw cash.”
He added: “For decades, RBS failed to invest properly in its systems. We need to put our customers’ needs at the centre of all we do. It will take time, but we are investing heavily in building IT systems our customers can rely on. I’m sorry for the inconvenience we caused our customers. We know we have to do better.”
He went on: “I will be outlining plans in the new year for making RBS the bank that our customers and the UK need it to be. This will include an outline of where we intend to invest for the future.”
The latest problem to hit RBS is a further setback to attempts to restore its reputation following the 2008 financial crash. It comes as the bank seeks to fight off fresh allegations concerning its treatment of companies which banked with RBS.
A dossier compiled by businessman and government adviser Lawrence Tomlinson accused the bank of forcing viable firms into its Global Restructuring Group, pushed them into default and then seized their assets at rock bottom prices. The allegations are denied vigorously by RBS, but the bank has now launched its own inquiry.
The bank is also facing fresh criticism over the bonuses paid to staff, amid reports that as much as £500 million could be paid out to staff this year.
Monday’s computer crash evoked memories of a far larger software problem that affected millions of customer bank accounts last year, when an upgrade failed, preventing hundreds of thousands of transactions from taking place.
While the problem this week hit fewer customers, it could not have come at a worse time, locking accounts between 6:30pm and 9:30pm, as online shopping reached a peak.
Others said they may have incurred charges, because money that had been due to go into their accounts had not done so, leaving them overdrawn.
Yesterday, RBS officials said that those left out of pocket would be compensated. Any customer who had a fee incurred as a result of the failure would not have to pay, the bank said.
Susan Allen, RBS director of customer relations, said: “We sincerely regret the inconvenience that customers have had. There have been some fairly horrible stories about the inconvenience and distress caused for people out shopping yesterday evening.
“If anybody is out of pocket, then we have made a commitment that we will make sure that everybody is put back in the right position.”
RBS, which is still 80 per cent owned by the UK government, said it had improved its services since the problems in June and July last year, although it has had additional problems since.
It comes just after Mr Mc-Ewan, who took over from Stephen Hester, gave a speech two weeks ago pledging an overhaul of the bank’s customer service. He said RBS needed to focus relentlessly on customer service to show that it was back on track.
Plans he has already outlined include new technology allowing customers to access their accounts online or via ATMs.
When Mr McEwan took the job, he wrote to tens of thousands of employees: “We still receive far too many complaints, often on issues that would never arise if our systems and processes were more effective.”
Richard Lloyd, executive director of consumer group Which?, described the computer problems as a “shambles”.
“There is a problem across the banking industry as to whether IT systems are fit for purpose.”
Big-name casualties in inquiry into RBS sharp practices claims
A PROBE into allegations that Royal Bank of Scotland drove firms to the wall to strip their assets will include the cases of high street casualties such as Peacocks, Clinton Cards and HMV, it was claimed yesterday.
The Scottish-based bank was accused in a report last week of deliberately pushing clients towards default in order to push them into a division called its Global Restructuring Group (GRG). It is claimed firms were then hit with massive interest rates and fees, which in some cases caused them to collapse. The report, written by Lawrence Tomlinson, the “entrepreneur in residence” at Vince Cable’s Department for Business, alleges RBS then bought their property and assets on the cheap.
Mr Cable has referred the matter to the Financial Conduct Authority, and the Serious Fraud Office has also been asked to consider the evidence. RBS has launched an internal inquiry, led by City lawyers Clifford Chance, to get to the bottom of the allegations.
One report yesterday said the circumstances around the administration of Peacocks, Clinton Cards and HMV – all put in GRG – will now be considered.
RBS’s case may focus on the firms’ existing weaknesses, which had nothing to do with their banking arrangements. In an interview last week, RBS chairman Sir Philip Hampton said the bank would have had to make individual decisions on clients’ financial health, and that striking the correct balance was difficult. He said: “We will, almost certainly, have been too heavy with some customers from time to time.”
An RBS spokesman said: “We welcome the FCA’s inquiry. As of now, no evidence has been produced that backs the claims of systematic fraud made.”