London: The Royal Bank of Scotland Group has been fined £56 million (Dh324.8 million) by UK regulators for IT failures in 2012 that left 6.5m customers without access to their accounts.

The bank, which is 81 per cent owned by the UK government, was fined £42 million by the Financial Conduct Authority, and a further £14m from the Prudential Regulation Authority which fined RBS and its subsidiaries Nat West and Ulster Bank.

The systems failure in June 2012 followed a technology upgrade that malfunctioned, leading to a backlog of 100m unprocessed payments across RBS, NatWest and Ulster Bank within only a few days.

The PRA said the fines were for “inadequate systems and controls” that “led to widespread disruption to customers and the financial system”.

“A joint investigation was considered necessary because the incident impacted upon the objectives of both the PRA and the FCA,” the PRA added.

The FCA and PRA noted that RBS has already paid £70.3 million in redress to UK customers and £460,000 to individuals and firms who were not customers but were affected by the IT failures.

The incident, which began on 18 June 2012, directly affected at least 6.5m customers in the United Kingdom, 92 per cent of whom were retail customers. The PRA said it had the potential to have an adverse effect on the safety and soundness of RBS, NatWest and Ulster Bank as it impacted upon:

— The ability of the banks’ retail customers to access their accounts

— The ability of the banks’ commercial customers to access their internet banking service, preventing them from accessing their accounts or making payments

— Customers of other institutions who were unable to receive payments from the banks’ affected customers.

— The ability of the banks to fully participate in clearing. An efficient clearing system is fundamental to the efficient operation of the financial markets.

— Disruption to the majority of RBS and NatWest systems lasted until 26 June 2012, and Ulster Bank systems until 10 July 2012.

Andrew Bailey, deputy Bank of England governor and chief executive of the PRA said the disruption “revealed a very poor legacy of IT resilience and inadequate management of IT risks.”

Philip Hampton, chairman of RBS, said that the failure was “unacceptable” and that the bank had “let down” its customers.

“I am confident that the progress we have made — in increasing the resilience of our IT systems through the additional investment of hundreds of millions of pounds and the enhancement of our control structures — has made RBS better able to provide the service our customers expect and deserve,” he said.

RBS, which has an annual IT budget of £2 billion, is not the only major high street bank grappling with technology issues. Technology consultants say the problems stem from the fact that most of the bank’s IT systems were built 30 years ago, and have had new systems “bolted on” to existing ones, resulting in hugely complex IT networks.

In the age of online banking, and banking apps, customers are demanding more frequent access to their data, and systems struggle to cope with escalating demand.

Lloyds, for example, says it processed 1.24 billion log-ons in 2013, up 16 per cent on the previous year. It expects that figure to grow to 1.4 billion this year. About half of those come from mobiles and tablets.

Last week, RBS was fined £400 million by the FCA and the Commodity Futures Trading Commission, a US regulator, for failings in internal controls that allowed traders to manipulate foreign exchange rates.

— Financial Times