Ulster Bank redress payout may cost almost €100m

THE COMPENSATION package announced yesterday for more than half a million Ulster Bank customers affected by the collapse of the bank’s computer systems this summer could end up costing close to €100 million, the bank’s chief executive has said.

A reimbursement package for “reasonable out-of-pocket expenses”, a freezing of account maintenance fees for all customers for more than six months and a one-off €25 payment for customers who had to call to branches to access funds during the crisis are among measures proposed.

The outage affected more than 600,000 customers in June and July. Many were denied access to their money, suffered delayed payments and could not view correct balances.

The problem was caused by a corrupted software update applied at the bank’s parent, Royal Bank of Scotland, in mid-June.

While €35 million had initially been set aside to cover the redress scheme, the bank’s chief executive Jim Brown told The Irish Times he now expected it to cost “tens of millions of euro more than that”. He said an internal inquiry had been concluded and details would be made public in “coming weeks”.

The package has been broadly welcomed. Consumer Association of Ireland chief executive Dermott Jewell described it as “a mixed bag”.

Fianna Fáil finance spokesman Michael McGrath called it “fair and reasonable”.

Ulster Bank will start reimbursing all “reasonable out-of-pocket expenses” incurred by customers from next Monday, and has committed to paying an extra 20 per cent on top of these expenses up to a maximum of €120 for personal and small and medium enterprise customers.

Mr Brown said reasonable expenses would include accommodation and legal costs associated with delayed property purchases, and extra travel costs and charges associated with extra borrowing.

Personal and current account clients who had to call to branches to withdraw funds because accounts were not updated will get a once-off payment of €25 once the branch visits were outside the normal pattern of their banking.

People with savings accounts will be given an automatic one-off payment equating to an additional rate for three months of 0.25 per cent annual equivalent rate on the average daily balance over the next three months.

The bank said some fees, charges and interest would be waived for three months and said no account maintenance fees for personal current account customers would be introduced before July 2013. It said credit ratings were of “significant concern to customers”, and it was continuing to work with credit reference agencies to ensure no customer’s rating is permanently affected.

Customers of other banks affected will have fees and charges refunded, but must contact their banks for out-of-pocket expenses.

The Central Bank said unsatisfied customers could refer a complaint to the Financial Services Ombudsman and that inquiries into the technical failure and how it was dealt with were ongoing.

Q&A

What is Ulster Bank doing to make amends?

It is reimbursing customers' "reasonable out-of-pocket expenses" and has committed to paying an extra 20 per cent. That 20 per cent will not exceed €120, so even if your expenses are €1,000 you will only get an extra €120 from the bank. Personal and current account clients who called to branches will get a once-off payment of €25. Savings account holders get a payment equating to an extra 0.25 per cent interest on the average daily balance over the next three months.

Is that it?

No. Some fees, charges and interest will be waived for three months, and no account maintenance fees for personal current account customers will be introduced before next summer.

How can I claim expenses?

You need to complete and print an "online technical incident customer form" available on the Ulster Bank website. Once done it can be sent back via freepost or dropped in to a branch network. Customers without access to the site can call the bank or drop in to any branch.

What paperwork will I need?

The bank says it "will help if customers can back up their claim with any original paperwork for example, phone bills, bus tickets, travel receipts, bills or invoices". Do not send original receipts, as if they get lost it is more problematic.

What if I have no receipts?

The bank says it will deal with such clients on a "case-by-case basis".

What about my credit rating?

The bank accepts credit ratings are a "significant concern" and it said it was continuing to work with credit agencies to ensure no customer's credit rating is permanently affected as a result of this incident.

What if I have not incurred any "reasonable out-of-pocket expenses" or did not qualify for the €25 automatic payment for visiting and transacting at a branch more frequently than normal, but was still very annoyed?

The bank says it will be "happy to discuss that customer's individual circumstances".