Central Bank to aid FSA probe of RBS

The Central Bank will work with the UK’s Financial Service Authority (FSA) on an investigation into the RBS group’s technical failure, expected to cost the bank more than the £125m (€158m) set aside to cover compensation payment.

The FSA is taking particular interest in what happened in Ireland. The UK’s financial watchdog has ordered RBS to give it a detailed review that looks at why the crisis in RBS’s Irish arm, Ulster Bank, took longer to resolve than in its UK arm.

The Central Bank said it would be several months before any investigation into what happened in RBS and Ulster Bank can be established. Ulster Bank confirmed that it will be subject to the FSA’s investigation.

The FSA’s investigation was revealed in British parliament yesterday in correspondence between FSA chairman Adair Turner, RBS chief executive Stephen Hester, and Treasury committee chairman Andrew Tyrie.

Turner wrote in a letter to Tyrie on Jul 13. “On receipt of the independent review, we will consider whether further regulatory action is required.”

The FSA probe is in addition to the bank’s independent review by law firm Clifford Chance LLP.

Separately, the FSA has written to the heads of all high street banks to demand a list of names of senior managers who can be held personally responsible should a similar IT failure at any bank happen again in the future.

The letters also demanded that the chief executives of the banks provided detailed plans on measures put in place to insure that the disastrous IT failure that left 17 million customers across Ireland and England without access to their own money.

By way of compensation to customers, Ulster Bank announced a package of measure last week to compensate both business and retail customers for any inconvenience caused.

The package of measures will see the bank covering fees, charges and debt interest incurred in error as a result of the incident, as well as making a €25 payment to customers who had to visit a branch as a result of the crisis.