The Central Bank view the Ulster Bank issue very seriously as that bank says it is considering ways of compensating customers affected.
The Director of Consumer Protection at the Central Bank Bernard Sheridan told the Oireachtas Finance Committee that it was unprecedented.
The contingency planning of Ulster Bank and RBS, he said, had been appalling.
Ulster Bank is considering ways of compensating customers affected by on-going technical issues at the bank.
Ulster Bank's CEO Jim Brown said the bank would be looking at its options in this area over the coming days. He said no one would be left out of pocket.
Mr Brown also denied suggestions that the problems at Royal Bank of Scotland and NatWest in the UK were prioritised over those at Ulster Bank.
Ulster Bank estimates that full service should be resumed for the vast majority of people by the week of Monday July 16.
Mr Brown said he was confident the bank would 'get there'.
Earlier, Ulster Bank said that many customers should see ''an improved position'' on their accounts today with records of transactions continuing to update.
Bernard Sheridan, told the Oireachtas Committee that Ulster Bank's approach to customer communications was, at times, exasperating.
He said what had happened was unacceptable and remains so today.
He said concerns had been articulated and repeatedly to Ulster and RBS
He said that the Central Bank would be insisting on a restitution plan for customers. The banks "first touch" on this had been extremely poor on the communications front with customers.
Bernard Sheridan said the Central Bank had taken extensive steps to minimise the impact of the problem at Ulster Bank in terms of not disrupting the National Payment System.
Mr Sheridan said the Central Bank would continue with its own examination of the technical problems in order to fully expose the causes and downstream consequences of this.
He said the Central Bank's powers related to Ulster Bank and its conduct.
The Bank, as a regulator in Ireland, would be working with the FSA to determine what went wrong at RBS, the source of which was a technical failure at RBS in Edinburgh on Tuesday 19th June which impacted Ulster on Wed 20th.
Central Bank can impose fines of up to €5m
He said sanctions the Central Bank could impose were fines on the companies, and on individuals as well as restricting the bank's activities.
Mr Sheridan said the maximum fine it could impose was €5m. Under new legislation being prepared, the Central Bank was looking for this to be doubled and to be linked with the turnover of the bank.
Fine Gael's Olivia Mitchell said it seemed to her that we were moving towards a cashless society, but there had to be guarantees that this was working.
She said if she were a customer of Ulster Bank, she would be tempted to hold cash.
Central Bank reaction criticised
Criticising the Central Bank's pace of intervention in the crisis, Pearse Doherty noted an eight line statement issued by the Central Bank nine days after the situation was happening which did not contain the sort of criticisms of Ulster Bank that the Central Bank was now making.
Deputy Doherty asked if the Bank could reassure him that no person who missed a payment arising from the "catastrophe" at Ulster Bank would have a black credit mark against them.
He wondered if the Central Bank had previously looked at the bank's disaster contingency planning.
Mr Sheridan said that in the early days of the problems that the bank's priority was to resolve the situation, but he accepted what Deputy Doherty said about the Central Bank's own communications.
He said he was satisfied that no one would have a negative credit mark placed against their name arising from the backlog in processing payments.
He said he would be looking to see whether Ulster Bank should remain at the end of the queue (after RBS and NatWest) in terms of how payments were processed.
Dealing with backlog six times slower than in realtime
Mr Shane O'Neill, director of banking supervision at the Central Bank said it appeared that no one at RBS had identified that processing a batch (of payments) in a backlog, could take up to six times longer than processing a batch in its normal slot. He was answering questions about business contingency planning at RBS.
Deputy Doherty wanted to know if the Central Bank had reviewed contingency plans at other banks in the past.
Mr Sheridan said the fall out from the Ulster Bank and the lessons learned, would have to feed into other banks.
IBOA asks public to resist urge to target staff
The Irish Bank officials association has asked customers of Ulster Bank to resist the urge to use staff as an easy target.
"Unfortunately in a small number of cases, customers in considerable distress have vented their anger on the frontline staff as the most convenient points of contact with the Bank" according to Larry Broderick, General Secretary of the IBOA.
The IBOA said that bank officials share the customers' sense of frustration but asked that the public direct their criticisms directly to bank's senior management.
Larry Broderick said that an effective contingency plan, and a standalone Ulster Bank IT system, needs to be put in place to prevent any repeat of this "catastrophic situation" in the future.