BoE apologises for the 2014 outage in interbank payments

LONDON (ShareCast) - An outage last year in the Bank of England's interbank payments system indicated a lack of efficacy at the central bank, prompting the Bank to apologise for the inconvenience. According to a report published by the BoE (Shenzhen: 200725.SZ - news) on Wednesday, the central bank had to suspend nearly £300bn of payments for several hours on Oct (HKSE: 3366.HK - news) . 20 after problems with its Real Time Gross Settlement system which underpins financial market trades in the City of London (LSE: CIN.L - news) .

The outage was an embarrassing blow for the BoE who said in response, it would strengthen its crisis management procedures in response to the report, which was drawn up by accountants Deloitte.

The report said the BoE should acknowledge that "in certain circumstances the Bank itself may be the cause of a wider financial services 'crisis'." According to the report, all cash transfers were eventually completed on the same working day but almost a third of house purchases did not take place until the following day or later.

The BoE said it has apologised to those who were affected, and implemented a compensation scheme to cover claims for costs incurred. "Affected parties were advised to contact their bank or building society and the Bank undertook to reimburse all claims paid. To date the Bank has settled nine claims totalling approximately £4060," the monetary authority added.

The BoE said it has reconstituted its RTGS Board, now chaired by the Deputy Governor for Markets and Banking, Minouche Shafik, who is putting in place an enhanced crisis management framework. "All of the remaining recommendations will be implemented as soon as possible, as detailed in the Bank's response," said the report.

"The RTGS system is vital to the effective functioning of the UK economy and the financial system. Participants in the RTGS system - and most importantly, their customers - rightly expect it to meet extremely high standards of service, availability and resilience. The Bank is committed to meeting those high expectations, including through the full and timely implementation of the recommendations contained in this independent review," said Shafik.