Ulster Bank fined £2.75m for IT disaster

IT outage in 2012 left 600,000 customers unable to access their accounts

RBS-owned Ulster Bank has been fined £2.75m by the Central Bank of Ireland following an IT outage that lasted a month and affected about 600,000 customers.

The investigation found that there was a failing in the outsourcing of Ulster Bank's IT systems and that the appropriate safeguards were not in place before the IT meltdown. The glitch itself was a result of an upgrade to CA7 batch processing software that was controlled by parent company RBS.

Ulster Bank, which has paid £46m in compensation to the customers that were affected, said that it accepted the findings.

The bank had outsourced its IT services to RBS in 2005, but the Central Bank of Ireland suggested that senior management at Ulster Bank did not have the required knowledge of how the IT infrastructure was operated, and that there was no ‘plan B' in case RBS suffered an outage.

"Firms are required to ensure that they maintain robust governance arrangements including, amongst other things, appropriate internal control mechanisms covering all aspects of their operations and infrastructure," said the Central Bank's director of enforcement, Derville Rowland.

"While the Central Bank recognises that IT outsourcing is a feature of modern banking business, outsourcing is no defence for regulatory failings. Ultimate accountability for compliance remains with firms and they must ensure that they maintain oversight of outsourced activities," she added.

Batch processing at RBS, NatWest and Ulster Bank have since been separated in an attempt to ensure that a similar outage does not occur again.