Ulster Bank to compensate customers as it passes on interest rate cut
DETAILS of compensation payments to Ulster Bank customers in financial difficulties because of computer problems at the bank will be ready within days, a senior official said.
And the bank became the first in the Irish market to pass on an interest rate cut to variable customers following a reduction by the European Central Bank of its key rate from 1pc to 0.75pc.
Ulster had the highest variable rate in the market at 4.75pc.
The British-owed bank failed to pass on the full cuts last November and December in the ECB rate.
Now it has agreed to bring its variable rate down to 4.5pc, in a move that will save homeowners €15 a month on every €100,000 borrowed.
Chief executive Jim Brown today promised an independent investigation into the IT failure which left many customers with unpaid bills and pledged none of the bank's 1.9 million users across Ireland would lose money.
He said the system for processing payments had worked properly for 25 years but broke down on the evening of June 19.
The resultant backlog has caused weeks of delay, with operations expected to be disrupted until July 16.
Mr Brown told a Northern Ireland Stormont committee: "It is unacceptable and our customers should expect better from us."
He added: "No customer will be left out of pocket as a result of this incident."
He said the incident was unprecedented in the banking sector, not just in terms of the impact on customers but in the complexity of resolving it.
The problem was created when maintenance on the computer system interfered with the processing of payments for the day's trading on the night of June 19. That meant the next day many customers' balances had not been updated. By the time that technical problem was resolved there was a backlog of payments pending - including the updating of accounts, direct debit payments, benefits and mortgages.
Mr Brown said the bank was working on a compensation package for customers and others affected like people whose employers use Ulster Bank to process their pay.
"We expect to have the policies finalised over the next few days. The whole theme here is to do this as quickly and painlessly as possible," he said.
He added: "The funds are in place to be able to do this as soon as is necessary."
An executive at the Ulster Bank's parent company the Royal Bank of Scotland, Chris Sullivan, said the bank still did not know exactly what had caused the IT problem, adding that would be addressed by a forensic, open and transparent independent review into what went wrong which would be shared with regulators, customers and the rest of the industry.
The board of the RBS has commissioned independent consultants to look at the whole incident, tell officials what went wrong and what they should do.
Representatives of Ulster Bank management also appear before an Oireachtas Committee today.