The UK's Financial Conduct Authority (FCA) is reportedly preparing to levy its biggest fine yet against Royal Bank of Scotland (RBS) Group over the bank's almighty computer meltdown two years ago.
Sources at the FCA told Sky News that the fine would be "several tens of millions of pounds," although the state-backed banking group could receive a 30 per cent discount if it pays up within 28 days. A demand for payment has apparently already been sent to the banking group, and its board is now mulling over the penalty.
RBS Group is under fire because, back in June 2012, up to 16.7 million of its customers at its three banks – RBS, NatWest and Ulster Bank – were unable to spend, deposit or move money in their accounts for four or more days.
The cockup was caused by an inexperienced technician who bungled a mainframe batch job, which halted and then delayed the processing of millions of transactions.
The FCA previously indicated it intends to come down hard on banks that let their IT systems fail. The agency has been taking an increasingly aggressive stance on the matter during its 18-month investigation into RBS.
"To access and manage our money we depend on the banks’ IT systems being reliable," Clive Adamson, director of supervision at the FCA, said in April.
"But IT outages continue, interrupting key banking services. We want to make sure that the banks have resilient IT systems in place that are able to cope with consumer demand, so customers aren't left financially stranded or disadvantaged."
RBS Group is certainly getting ready for a big financial hit. In last week's earnings call bank officials said that they had set aside £175m to reimburse customers and pay off fines. It may need more however, since the Central Bank of Ireland is also investigating whether or not to fine RBS Group for its failings.
In addition to setting funds aside for fines, RBS Group has also pledged to spend £750m on its computer systems, both front and backend, and says it already spends £2bn a year as part of its IT budget.
No one from RBS Group was available for comment at time of publication. ®