RBS share price: Bank faces fine over 2012 IT failure

on Nov 3, 2014
Updated: Apr 9, 2020
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iNVEZZ.com, Monday, November 3:  Royal Bank of Scotland Group Plc (LON:RBS) is to be fined tens of millions of pounds by the City regulator for an IT blunder in 2012 which left customers without access to their money.

As of 13:22 GMT today, RBS share price had dropped almost two percent to 380.40p.
*h*Record fine for 2012 IT failure*h*
RBS, which is 80 percent-owned by the UK government, is facing tens of millions of pounds worth of fines from the Financial Conduct Authority (FCA) for the IT failure back in 2012, which resulted in seven million customers being locked out of their accounts for almost a month, Sky News reported today. The IT problem was caused by an unsuccessful software upgrade. The proposed fine would be one of the largest ever imposed by the City watchdog for IT failures.

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According to Sky News, RBS could be offered a discount of up to 30 percent on the proposed penalty if it decides to settle within the 28-day window given by the FCA.  The investigation, which was launched in April last year, could be close to being concluded, unless the group tries to contest the regulator’s findings.
The Central Bank of Ireland is also conducting an investigation into RBS’s Ulster Bank subsidiary in relation to the same issue. State-backed RBS commented last week that it “anticipates entering into settlement discussions with the CBI before the end of the year”.

On Friday, RBS revealed that it had made a provision of £400 million relating to potential costs following investigations into the foreign exchange market, as well as provisions of £801 million related to its ‘bad bank’ and Irish unit. (RBS share price: Lender books £400m for currency probe)

*h*RBS to support the City of London Police*h* 
Today’s news came alongside an announcement that last week RBS signed a landmark agreement with the City of London Police to “tackle the most complex and challenging financial crimes” facing the country, by providing advice on financial crime.
RBS staff will assist the police‘s economic crime directorate on a voluntary basis, supporting training events and research and development projects. They will not be involved, however, in any operational police activity and will not provide advice on information relating to specific investigations.

The RBS partnership with the City of London police comes amid growing concern about the rising cost of financial crime, which the police force expects to exceed £73 billion this year, the Financial Times reported today. Fears over cybercrime increased in particular following a series of high-profile attacks, such as that on JPMorgan Chase this year, when personal data from about 76 million US households was stolen.
Commissioner Adrian Leppard, who is the National Policing Lead for Fraud, commented: “Signing this agreement with RBS, which we hope will be the first of many with the financial sector, means we can now tap into their massive knowledge base of financial products and digital technology and use their foreign language skills, which reflects the increasingly international dimension of economic crime investigation.” 
The move announced today came as a surprise to many as RBS is itself currently the subject of high-profile investigations, such as the suspected manipulation of foreign exchange markets and the alleged mis-selling of US mortgage securities. The City of London Police, however, insisted that the investigations into the bank would not interfere with the new venture.
Emma Smith, head of Security, Resilience and Control at RBS, commented on the agreement: “Protecting the safety and security of our customers and staff is a top priority as we work towards making RBS the most trusted bank by 2020.”
She added: “I am delighted to have signed this agreement and look forward to working closely with the City of London Police in their fight against financial crime. The experience and expertise of our employees will help safeguard our customers and others.”
**As of 13:25 GMT, buy RBS shares at 380.90p.**
**As of 13:25 GMT, sell RBS shares at 380.70p.**

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