Ulster Bank has been fined €3.5m by the Central Bank for IT and governance failings arising from the IT meltdown at the bank's parent, RBS, in the summer of 2012. 600,000 Ulster Bank customers were left without access to their accounts over a 28 day period in June and July. The Central Bank acknowledges that Ulster Bank put in place facilities at the time to ensure that customers were not left completely without cash and that their credit ratings would not be affected, but they deemed it serious enough to slap this record fine on them. This is in addition to the €59m that the bank has forked out in redress to affected customers. Ulster Bank has said it accepts the findings in full and that it has put in place sufficient remedies to ensure there is no repeat of the problems and even in the event of an outage they can still process their transactions while the outage is being dealt with.
The Central Bank's Director of Enforcement, Derville Rowland, says today marks the conclusion of a long and structured process and fines and penalties in redress payments worth €62.5m has been levelled on Ulster Bank. Ms Rowland says the figure of €62.5m comprises €59m in redress payments for the bank's customers who were deprived of basic banking services for what she called an "unacceptable period of time" and a €3.5m regulatory fine - the maximum fine which can be imposed by the Central Bank in the circumstances of this case. The Director of Enforcement says the imposition of the largest fine possible marks the case out at the highest level of seriousness and makes a clear statement about the need to establish robust governance and risk controls in the outsourcing arrangements. While outsourcing is perfectly permissible, Ms Rowland says it is no defence for regulatory failures.
Ms Rowland noted that Ulster Bank's problems continued well after the IT glitches were corrected in the rest of RBS's operations because some decisions were taken on the night that the issue arose without a full understanding of the consequences and the impact of those decisions. She says the problem was further impacted by the fact that Ulster Bank outsourced its IT services to its UK parent RBS, but in doing so the bank failed to exercise the appropriate oversight - and key in this case - the understanding of its IT service that was being provided. This was a governance failure, the Central Bank official stated.
She said that Ulster Bank also failed to understand the IT risks to its business and customers and that was why we found ourselves with incorrect information about the time it would take to fix the problem. Ms Rowland states that banks must be in control of risks to their business and understand the processes.
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MORNING BRIEFS - The UK Financial Conduct Authority has fined five banks a total of £1.1 billion for what it called 'failings' in the foreign exchange market. The five banks are Royal Bank of Scotland (Ulster's parent), HSBC, Citigroup, JP Morgan Chase and UBS. The FCA says that its investigation into Barclays is continuing. The US Commodity Futures Trading Commission has also imposed fines totalling $1.4 billion on the same five banks. The Bank of England said its oversight committee has found no evidence that any of its officials was involved in any unlawful or improper behaviour in the forex market.
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