The Bank of England has released the results of an independent review by Deloitte on the disruption to the Real Time Gross Settlement (RTGS) system on 20 October 2014. The Bank has accepted all of the review’s recommendations and set out how it intends to implement each of them. The Bank of England is responsible for the operation of the RTGS system, through which it acts as a settlement agent to the UK’s main interbank payment systems. In this role, the Bank has to provide ultimate, risk-free means of discharging payment obligations between parties.
On October 20th 2014, following the restoration of the RTGS system after a 9-hour service disruption, it had been announced that the Bank would commission an independent review into the causes of the incident. The key findings of the independent review that have come forth are:
- The root cause of the incident was the introduction of defects as part of functionality changes made to the RTGS system in April 2013 and May 2014.
- All submitted payments (total value of £289.3 billion) were settled within the day’s operating hours and substantive risks to financial stability, financial loss, or long-term damage to the economy were avoided through the execution of a comprehensive plan to fully resolve the issue and enable all submitted transactions to be cleared by the end of the day.
- The outage caused inconvenience to RTGS participants, and by consequence, to their customers – most notably a delay to some housing transactions.
- Among the lessons learned, the incident has highlighted the need for the Bank to further consider contingency solutions for RTGS, as well as the future development of the system. In addition it highlights the need to strengthen the Bank’s crisis management framework.
The Bank has officially apologised to customers that were affected, and has implemented a compensation scheme to cover claims for costs incurred. Affected parties had been advised to contact their bank or building society, and the Bank undertook the responsibility to reimburse all claims paid. The Bank has settled 9 claims totalling approximately £4,060 to date.
A series of actions taken by the Bank, in parallel to Deloitte’s review, have already addressed several of the review’s recommendations. The Bank is currently putting in place an enhanced crisis management framework.