Ulster Bank says it will compensate customers
THE WAY Ulster Bank is handling the technical failure which has left more than 100,000 customers without access to funds for over two weeks has been described by the Central Bank as appalling, unacceptable and exasperating.
It has warned that those affected by the crisis will have to be compensated.
Ulster Bank said yesterday, for the first time, that compensation would be offered to customers affected by the technical problems.
It now expects that the problems will continue into next week, and until July 16th at the earliest.
The bank’s chief executive, Jim Brown, said he was confident that the bank “should be over the worst of this” at that stage despite twice getting the timing wrong on how long it would take to resolve the technical issues since the computer crash occurred on June 19th.
“We are a lot more confident because we can see the transactions getting cleared and the backlog being worked through,” Mr Brown told The Irish Times.
He said details of compensation to be offered, in addition to covering any out-of-pocket costs incurred by customers, would be decided by the bank before the weekend.
He declined to say exactly what the compensation would involve, but it would be based around fees, charges and interest charges.
In response to customer threats to move their bank accounts elsewhere, Chris Sullivan, head of UK corporate banking at the bank’s parent company Royal Bank of Scotland, said Ulster Bank had served the island of Ireland for 176 years.
He hoped customers “wouldn’t judge the bank on one thing, even though we recognise that it is really serious”.
Appearing before the Oireachtas Finance Committee yesterday, the Central Bank’s director of consumer protection, Bernard Sheridan, castigated both Ulster Bank and Royal Bank of Scotland for contingency planning which “has self-evidently been appalling”.
Mr Sheridan 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 regulator 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.
“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.”
Mr Sheridan declined to say what penalties, if any, would be imposed on Ulster Bank once the crisis was resolved, but he said the maximum fine it could currently impose was €5 million.
He said it was now clear that arrangements for an IT systems failure had not operated as they should have at Ulster Bank and as a result 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”.
The Central Bank itself came under fire 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. While the technical problems became public on Wednesday, June 19th, the first statement by the Central Bank was not released until the Sunday.
Senior management from Ulster Bank will appear before the committee today.