EVERY bank should be checking its computer systems in the wake of the IT glitch at Royal Bank of Scotland (RBS), the chairman of an influential parliamentary committee said today.
Andrew Tyrie, chair of the Treasury Select Committee, also called on the group to give “clear and straightforward” information to affected RBS, Ulster Bank and NatWest customers to help them seek compensation.
But the Conservative MP also praised RBS chief executive Stephen Hester for doing the “right thing” in taking full responsibility and moving swiftly to fix the far-reaching problem.
RBS set aside £125m for dealing with the fiasco in its half-year results but warned the costs could escalate while Ulster Bank current account holders will get £20 as a goodwill gesture.
Publishing an exchange of letters between the committee, RBS and the Financial Services Authority (FSA), Mr Tyrie said: “This episode, and the initial confusion surrounding it, did little for public confidence in our banks.
“Mr Hester took swift action to remedy the failure; he also took full responsibility on behalf of RBS. He did the right thing.
“Those affected now need clear and straightforward information to enable them to seek redress.”
He added: “Every bank should be checking its IT systems. We need to have confidence that such a failure cannot happen again.”
In a letter dated July 6, Mr Hester said that initial investigations suggest the root cause of the IT failure was a routine software upgrade managed and operated by the group’s team in Edinburgh.
While the issue was promptly fixed, the group was left with a “significant backlog” of data processing - but no customer data was lost or destroyed.
Mr Hester said: “Everyone at RBS is deeply frustrated by the scale of disruption experienced by our customers, and especially the time being taken to restore normal service at Ulster Bank.”
The group is conducting an investigation into what went wrong, which will look at risk management, contingency planning and also the impact of cost-saving measures on the business.
In his letter, Mr Hester confirms that the glitch affected the Government Banking Service systems - the banking shared service provider to government and the wider public sector including HM Revenue and Customs.
FSA chairman Lord Adair Turner confirmed to the committee in his letter dated July 13 that the City regulator would be conducting its own separate review into the IT meltdown.