Stephen Hester's response to Andrew Tyrie MP, chairman of the Treasury Select Committee
Thank you for your letter of 27 June. I welcome the opportunity to update the Committee on the actions we are taking to resolve the IT systems failure that led to disruption in the service we provide to our customers.
- (1888PressRelease) June 30, 2012 - As we have confirmed, account balances have registered as normal for the vast majority of RBS and NatWest customers over the last few days. We have more work still to do in Ulster Bank and I apologise especially to our customers there for the slow return to acceptable service levels.
I have previously made clear to the Committee that my top priority since joining the bank three and a half years ago has been to change RBS - physically and culturally. At the centre of this aim is to make our customers the number one focus. There is much to do on many fronts and we clearly have yet to achieve a satisfactory level of systems resilience as part of that, albeit this was a unique incident. I therefore view this incident with the utmost seriousness, hitting customers as it did. I am determined to personally lead the process of regaining the trust of our customers. I will ensure a full and detailed investigation into the causes of the problem, overseen by independent experts and reporting to the Board Risk Committee and then the improvements we will make subsequently. We will continue to update our customers regularly.
Incident background
Each evening, the bank processes the day’s transactions across all our businesses. This is a highly complex and large-scale operation - on an average day we process around 20 million transactions. Due to the scale and complexity of the task the transactions are processed in batches through highly automated systems. In normal conditions this overnight batch processing completes before business resumes the following day.
The incident
The initial reviews we have carried out indicate that the problem was created when maintenance on systems, which are managed and operated by our team in Edinburgh, caused an error in our batch scheduler. This error caused the automated batch processing to fail on the night of Tuesday 19 June. The knock-on effects were substantial and required significant manual interventions from our team, compounded because the team could not access the record of transactions that had been processed up to the point of failure. The need to first establish at what point processing had stopped delayed subsequent batches and created a substantial backlog. It is not clear at this stage why that record was not available. Consequently, a significant number of customer account balances did not update as they should have from Thursday 21 June.
Progress to date
Although the problem was rectified promptly, we were faced with a processing backlog which had to be cleared before we could begin to return the systems to normal. In order to be able to recommence automated batch processing and to move towards a recovered state, the batches had to be brought back into sequence. Over the weekend, good progress was made in bringing the batch processing up to date for RBS and NatWest, with the aim that both would be able to open for business on Monday 25 June with customer balances updated.
During last Thursday and Friday the days most heavily affected by delayed balance updates and related payment delays, extensive support was mobilised to help customers whilst the systems were returned to normal. This help continued over the weekend and during this week.
As we have confirmed, the major backlog of account balance updates cleared on Monday and Tuesday for RBS and NatWest customers. This means that account balances have registered as normal for the vast majority of RBS and NatWest customers this week. As previously cautioned, however, progress towards a completely normal service is likely to be affected by the system volumes over recent days.
Ulster Bank has been more heavily affected, which we particularly regret, as it is, in part, dependent on NatWest systems. While progress is being made we are being purposefully cautious in our approach to ensure our solutions are sustainable. We expect the Ulster Bank situation to have improved substantially by early next week. We continue to work closely with the Central Bank of Ireland and regularly update them on progress. We are working day and night to process the backlog of transactions for Ulster Bank as quickly as possible though some level of inconvenience is likely to continue into next week.
Our commitment to our customers
We are doing everything possible to complete a return to a normal service. Our people are working tirelessly to achieve this. We managed to resolve a very large number of difficulties experienced by customers immediately through our branches and call centres. There were 15,000 others that required a greater degree of attention. We have so far resolved over 90 percent of them.
Customers rightly expect more from us than this incident provided. We are committed to ensuring that no one will be left permanently out of pocket as a result of this. Our NatWest, RBS and Ulster Bank branches have been open for extended hours all week and our call centres have twice as many staff as normal answering calls. We will waive or refund all overdraft fees and charges for current account customers who have been affected. Affected current account customers who have an RBS, NatWest or Mint credit card in good order can withdraw cash from an ATM with cash advance fees and one month’s interest waived or refunded. Any customers who have been experiencing problems which they would like us to redress can contact us on numbers that we have been advertising in the national press.
We know this incident has also affected people who are customers of other banks. We have worked closely with those banks to ensure they can fully resolve any such concerns for their customers. We are grateful for the support other banks have given.
As I have inferred, our staff have been a tower of strength during this regrettable episode, dedicating themselves to fixing the problem and helping customers through the inconvenience. It shows the true nature of our people. We all hope to harness those qualities more positively in service of our customers as RBS continues to change for the better.
As outlined above we will carry out a full and detailed investigation into the causes of the problem, overseen by independent experts, once the critical system recovery tasks are completed and we will continue to liaise closely with regulators. We will publish relevant findings from this investigation in due course. In the meantime, our priority is helping our customers and restoring a dependable banking platform.
We apologise again for the significant inconvenience we know this incident has caused and sincerely thank our customers for their patience.
With best regards,
Stephen
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