By Mark Kleinman, City Editor
The City regulator is to fine the taxpayer-backed Royal Bank of Scotland (RBS) tens of millions of pounds for an IT failure in 2012 which left customers without access to their money.
Sky News can reveal that the Financial Conduct Authority (FCA) told RBS last month that it must pay a sum that would represent a record for a systems-related problem, reflecting the serious nature of the breakdown almost two-and-a-half years ago.
In its third-quarter results announcement on Friday, RBS reiterated previous statements about the failure, pointing to an earlier provision in its accounts of £175m to reimburse customers who had suffered losses.
However, it added that enforcement proceedings had commenced, meaning that the FCA had now proposed a settlement and that the bank had been given 28 days to respond.
The development means that an end to the FCA's enforcement investigation, which began in April 2013, is now in sight, although the precise timing could be delayed if RBS decided to contest any of the regulator's findings.
RBS could receive a discount of up to 30% on the proposed penalty if it agrees to settle within the 28-day window under FCA rules.
Sources put the scale of the likely fine to be imposed on RBS at "several tens of millions of pounds", which would rank it among the largest ever handed out by the City regulator for offences unrelated to the manipulation of financial markets.
The Central Bank of Ireland is also investigating RBS's Ulster Bank subsidiary in relation to the same issue, and RBS said last week that it "anticipates entering into settlement discussions with the CBI before the end of the year".
Sky News revealed earlier this year that the FCA was to tackle the robustness of banks' IT systems as one of its priorities for this year.
Last December, RBS suffered another systems outage on the busiest online shopping day of the year, the third time in about 18 months that such a problem had prevented customers from using cards, cash machines and online banking services.
Other banks have also been hit by IT problems which have affected customer-facing services on a regular basis.
RBS has since pledged to invest more than £1bn in its digital capabilities and IT systems during the next three years.
Clive Adamson, director of supervision at the FCA, said in April: "To access and manage our money we depend on the banks' IT systems being reliable. But IT outages continue, interrupting key banking services.
"We want to make sure that the banks have resilient IT systems in place that are able to cope with consumer demand, so customers aren't left financially stranded or disadvantaged."
The FCA's new work is being conducted in conjunction with the Prudential Regulation Authority and the Bank of England, and is examining how banks and building societies manage their exposure to IT risks.
It is also looking at the level of engagement by bank boards on the issue, as well as whether directors are sufficiently knowledgeable to challenge executives.
RBS and the FCA declined to comment on Monday.
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