The manner in which Ulster Bank is handling the technical failure which has left tens of thousands of customers without access to funds for over two weeks has been described by the Central Bank as “appalling”.
Appearing before an Oireachtas committee today, the bank's director of consumer protection Bernard Sheridan castigated both Ulster Bank and its parent Royal Bank of Scotland for contingency planning which "has self-evidently been appalling".
Mr Sheridan also criticised the bank's approach to customer communication as "exasperating" and said the Central Bank would be requiring Ulster Bank "to put in place a comprehensive restitution plan for impacted customers".
He said the bank would be insisting that Ulster Bank compensated its customers and customers of other institutions affected by the crisis for costs and charges incurred as a result of the collapse of its systems following a software failure on June 19th.
"It had to be recognised by Ulster Bank in designing this restitution plan that their customers have been seriously inconvenienced by these events. This extends to the small and medium businesses as well as personal customers," he said.
The Central Bank expected the plan to be "implemented effectively and efficiently" and he said the bank would be monitoring the process throughout.
Mr Sheridan declined to say what level of penalties, if any, would be imposed on Ulster Bank once the crisis is resolved but told the committee that the maximum fine it could currently impose was €5 million.
He said it was clear arrangements for an IT systems failure had not operated as they should have at Ulster Bank. He said the Central Bank had instructed all banks in the Irish clearing system to review their contingency plans "and to formally reconfirm that a robust recovery system is in place".
While the Central Bank was critical of Ulster Bank's response to the crisis, it came under fire itself for what was described as its slow response to the system breakdown.
Fianna Fáil's Michael McGrath and Sinn Féin's Pearse Doherty described the initial response of the Central Bank as inadequate.
Mr McGrath said he would have liked to have seen “far more upfront and active engagement" from the regulator. He noted that while the technical problems became public on Wednesday June 19th, the first statement by the Central Bank was not released until the following Sunday.
"Maybe we should have issued something sooner," Mr Sheridan conceded. However, he said the regulator’s priority was to make sure the problem was "to resolve the issue very quickly". Only when it became apparent this was not going to be the case did the Central Bank communicate directly with the public.
The committee also expressed concern that a lack of IT expertise within the Central Bank meant its ability to investigate the causes of the problem was seriously hampered. In response, Mr Sheridan said that it was not a function of financial regulators to monitor IT systems across the sector.
Senior management from Ulster Bank will appear before the committee tomorrow.
In an update this morning, Ulster Bank said it expected the coming week, starting July 9th, to be the final week of any "significant" delays for customers, and predicted gradual but noticeable improvements throughout the remainder of this week.
"It is our expectation that by the week of July 16th the vast majority of customers will return to a normal service, barring any residual reconciliation required," the bank said.
The bank is still one week behind on processing the daily “batch” of transactions as a result of a computer glitch at a technical facility in Edinburgh run by the bank’s owner, Royal Bank of Scotland, over two weeks ago.
Ulster Bank was yesterday processing transactions that should have gone through its system on Tuesday, June 26th, according to well-placed sources familiar with attempts to correct the technical problems. Chief executive of the Irish bank Jim Brown had said last week that the problems should be rectified by the start of this week.
The further delays have been attributed to the slow processing of daily transactions from last week that should in normal circumstances have taken between six and 12 hours to complete but are taking 24 hours due to technical problems.
Slow progress on resolving the problems has pushed the crisis into its third week. Rival lender AIB has helped Ulster Bank to process payments for large companies, including the HSE, one of its biggest clients.
