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16 May 2013
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House transactions hit by banking bug
26 Jun 2012
Numerous house sale completions that were due to take place over the last few days have been postponed by the computer system problems at NatWest and RBS banks, leaving buyers and sellers stuck.
As work on the backlog caused by the problem continued over the weekend, home-buyers who were unable to prove that their funds had been transferred and sellers unable to show they could redeem their mortgages – worrying both sets of solicitors who had given, as is routine, written undertakings.
It is not known how many transactions were hit by the chaos, but the number could have been substantial.
On Friday afternoon solicitors were issued with emergency guidance that they would not risk disciplinary action if the conveyancing transaction had to go ahead without the normal bank checks – provided they had taken other precautions.
The Solicitors Regulation Authority wrung promises from NatWest and RBS that they would indemnify the conveyancers in such circumstances. The banks said they were treating those requiring property purchase completions as priority.
Also affected by the glitch were tenants needing to pay their rent, whether by cash or direct debit, and people waiting for salaries.
Altogether, some 12m customers were affected by the IT glitch which prevented payments being made in and out of accounts from last Tuesday onwards.
The Solicitors Regulation Authority issued a statement on Friday afternoon. It said: “The SRA has discussed this issue with NatWest and RBS. The banks are trying to resolve these problems and recognise the difficulties being caused to solicitors and their clients.
“They have confirmed that where firms have used best endeavours to ensure the payment has been made into their account, for example by contacting lenders (or the buyers’ solicitors) direct for confirmation of payment, they are prepared to give appropriate undertakings to indemnify solicitors.”
The statement gave some detailed advice to conveyancers and concluded: “We would like to assure those solicitors who have given undertakings with regard to completion that we cannot foresee a situation where disciplinary action would be taken due to problems that arise as a result of these difficulties.
“Equally, should there be a breach of the SRA Accounts Rules as a consequence of the present system failures, and solicitors acting in their clients’ best interests to nevertheless complete transactions, disciplinary action will not be taken.”
The Financial Ombudsman Service said that anyone affected should keep records, and advised that banks are obliged to return affected customers to the position they would have been in had the problem not occurred. NatWest has already said no one will be left out of pocket.
The IT glitch was apparently caused by bank staff trying to install a software update on the system, but ending up corrupting it instead.
Earlier this month, RBS-NatWest launched a mobile banking app that lets people withdraw money from cash machines using their smartphone.
But experts warned that banks could be in too much of a rush to deliver new services.
Daoud Fakhri, senior analyst at consultancy Datamonitor Financial Services, said: “This episode is emblematic of wider problems facing the banking sector as a whole.
“Many providers, being early adopters of IT systems when the technology was still in its infancy, have been left saddled with inflexible core systems that are often several decades old and that are increasingly unable to cope with the demands being placed on them.”
He said it increased the likelihood of episodes such as the NatWest mishap occurring again.
David Cothier
Finance Assistant - Head Office & Accounts
01865 760055 / david@scottfraser.co.uk
Source: http://propertytalklive.co.uk / http://www.estateagenttoday.co.uk
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