Jill Kerby: Computer glitch shows we all need a back-up account

“There but by the grace of God…” is an expression that the heads of every other retail bank in these islands must have muttered at least a couple of times since June 19, the date that a software code patch on the Royal Bank of Scotland computer system that clears 20-million-odd current account bank transactions every night, failed with disastrous consequences.

“There but by the grace of God…” is an expression that the heads of every other retail bank in these islands must have muttered at least a couple of times since June 19, the date that a software code patch on the Royal Bank of Scotland computer system that clears 20-million-odd current account bank transactions every night, failed with disastrous consequences.

If you are one of the 600,000 Ulster Bank customers here in Ireland whose direct debits and standing orders were disrupted, you didn’t get your pay or pension delivered into your account, or were unable to transact regular business with another bank online, then you’ve experienced what it’s like when something we’ve all come to expect – instant access to our accounts via our computers or the ATM – fails to happen.

Ulster Bank’s latest customer update at time of writing this article – 1.30pm last Friday – stated that “The majority of our systems are now showing account balances as of today. However, some items, such as cheques, manual lodgments and some payments have yet to be processed and therefore will not be reflected in account balances. We expect that services should begin to return to normal from Monday 16 July.”

Ulster Bank will certainly come under fire again if the month-long backlog and disruption to accounts is not sorted out by the end of this week. But realistically no one should expect everything to be back to normal by then.

Instead, the next phase of the debacle will begin – that is, identifying any missed or late payment charges made against your account (and possibly against your credit record) by either Ulster Bank itself or other creditors and institutions that would have been paid on time if it hadn’t been for the disruption.

Every Ulster Bank customer and anyone affected by failed third-party transactions via Ulster Bank should be going through their bank statements and put together a list of those that were not paid on time and then, when they do have a full and up-to-date statement, match these with any late bill notices they’ve received. You will need this information when claiming any refund for penalties, fees or charges from the bank.

(This assumes that there will be no automatic refund – my understanding is that every customer’s account that has been affected will have to be dealt with manually.)

By the end of this week, if your account is not fully operational – with every transaction being processed online and on-schedule – you still have time to consider opening a new account in a new bank and inform the payroll office in your work that they should pay July’s pay into this new account. You should then pay direct debits and standing orders manually, informing your service providers or creditors that any further backlog will be cleared by Ulster Bank.

To switch or not?

This week many will be wondering if they should close their Ulster Bank account altogether and switch to a different bank.

No one knows for sure what happened at RBS, where the fault originated, but suffice it to say that every bank here uses similar programmes.

All we can hope is that Irish banks’ back-up systems – which also failed at RBS – are tested more frequently and that they maintain the right numbers of people in their IT departments, despite cutbacks.

Some commentators have suggested that UK state ownership of RBS after they had to pick up over £24 billion in losses in 2009 resulted in insufficient investment in the IT system, but this has been dismissed. Yet here, the Irish state, itself bust, is also the direct owner of AIB, EBS, PTSB and the old Anglo Irish Bank.

Meanwhile, switching an account is not as easy or seamless as the banks would suggest under the ‘Code of Conduct on Account Switching.’ There is a huge amount of paperwork that has to be conducted between your old bank, your new bank and all the people and companies you pay (or are paid by) online. The banks so most of it, but you still have a number of parties to contact yourself.

A switching date will also be agreed, and within 10 days everything should be accomplished to shift your bank activities from the old to new banks, but timing was everything. I switched banks for the first time in 30 years earlier this year and there were a few hiccups.

Mostly you need to be patient and watchful that nothing on your account has been left out of the all-important ‘Account Transfer Form’ that you will get in the switching pack issued by the new bank.

National Irish Bank, my new bank, whose parent is the Danish-owned Danske Bank, is an entirely cashless and mainly e-bank, bank. (Cheques and cash can be deposited via An Post.) I’m very conscious of how vulnerable I could be if anything went wrong to the computer system in Denmark or here, and how much trust we have to have in the people who run their IT departments.

An old-fashioned deposit account in a credit union (and perhaps the post office) may be the answer, but even their deposit and withdrawal systems are reliant on computer programmes.

Banking is going entirely in one direction – towards cashless e-banking and the end of fully staffed high street branches. (AIB is shedding two dozen of its branches; NIB nearly all of them.) There’s no point in fighting it, but perhaps spreading your cash-access risk is a good idea: have a ‘back-up’ emergency account in a different bank than your regular one.

Finally, Ulster Bank boss Jim Browne promised that a compensation package for affected Ulster Bank customers would be announced by last week. At time of writing there was no news.

Perhaps this is also something that can only be determined with the final ‘butcher’s bill’ for the month-long debacle… whenever that will be.

jill@jillkerby.ie