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Bank of England apologises and orders inquiry into payment system crash – as it happened

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Worrying day for people moving house, as the system used to move billions of pounds between banks in the UK every day crashes.

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Mon 20 Oct 2014 16.52 EDTFirst published on Mon 20 Oct 2014 02.32 EDT
The Bank of England in London,
The Bank of England in London, Photograph: Anthony Devlin/PA
The Bank of England in London, Photograph: Anthony Devlin/PA

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Bank of England apologises for today's system crash

Bank of England governor Mark Carney. Photograph: Lynne Cameron/PA

Late breaking news.... the Bank of England has just issued a statement, apologising for “any problems” caused by today’s technical crash.

It also confirmed that every payment submitted to its Real-Time Gross Settlements (RTGS) system has been processed, thanks to the four-hour extension put in place.

Here’s the full statement from Threadneedle Street:

Bank of England statement – update on RTGS

RTGS closed at 20:00 hrs (BST).

All 142,759 payments submitted to RTGS today before the extended deadline have now been processed. The Bank has put in place extra steps to monitor the system at the start of the day tomorrow when RTGS will open at 06:00 hrs (BST) as usual.

The Bank apologises for any problems caused by the delays to the settlement of payments today and has launched a thorough, independent review of the incident.

And that really is all for tonight. We’ll be back tomorrow to see if the wheels of the financial system spin smoothly tomorrow, and to cover aftermath of this rare, unfortunate, and embarrassing systems crash. GW

Red-faced Monday for the Bank of England

I think’s all for tonight. What a day - I’m dubbing it Red-Faced Monday, given the embarrassment heaped on the Bank of England.

Our earlier summary covers the chaos caused after a vital payments system went wrong today:

Summary: A bad day for the Bank of England

Since then, we’ve had an apology from CHAPS (the “unsung hero” of the banking world) to customers, and home buyers, who were unable to get their payments processed.

And MPs continue to pile pressure on the Bank; the Treasury committee may decide to vet the person charged with investigating the biggest system crash in the City in years.....

I’ll update the blog again if there are more developments. Otherwise goodnight, and if you’ve been trying to move house today, good luck.....

Andrew Tyrie MP, head of the Treasury committee, has welcomed the decision to hold an independent inquiry into the Bank of England’s system failure.

He says it is “appropriate” that an independent reviewer looks into “such a serious episode”.

Tyrie may also want to meet the person leading the probe, he added, in a letter just released:

Andrew Tyrie’s letter to Mark Carney Photograph: Treasury Committee

CHAPS apologises for disruption

CHAPS has just issued a statement, apologising for the disruption caused to its service by the problems at the Bank of England.

Phil Kenworthy, managing director of CHAPS Co says:

“Following the operational incident at the Bank of England earlier today, CHAPS would like to apologise for any delays any customers may have experienced with their payments and would ask that anyone impacted by this contact their Bank or Building Society for assistance.”

Kenworthy also reveals that CHAPS, which finally started working around 4pm today, managed to process more than 140,000 payments -- a typical day’s work. The decision to keep open late paid off.

“Today, CHAPS’ payments were held up for several hours due to technical issues in the Bank of England Real Time Settlement Central System. We are pleased to report that the problem was resolved mid-afternoon and, following an extension to the CHAPS processing day, just under 143,000 payments were settled - in line with the normal average day’s volumes.”

Time’s up, Chaps!

No, I’m not reliving my days as an Oxford pub barman (nostalgia). It’s 8pm, which means the Bank of England should be turning off its real-time gross settlement system right now.

Did all the orders get processed? Are house movers still in limbo? It’s not clear if we’ll find out tonight....

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Summary: A bad day for the Bank of England

Time for a recap:

The Bank of England faces tough questions tonight after a key system that underpins the UK financial sector crashed, and was out of action for most of the day.

In the last few minutes the BoE announced that it will hold an independent inquiry, and the results will be published.

It promised to find:

the causes of the incident, the effectiveness of the Bank’s response and the lessons learned for future contingency plans.

Andrew Tyrie, head of the Treasury Committee, is demanding answers on what went wrong.

And the Law Society wants reassurances that it can’t happen again.

There were already calls for a thorough inquiry into the failure of the Real Time Gross Settlement RTGS system, which only began working at 4pm.

RTGS is due to keep processing payments until 8pm tonight, four hours later than usual, in a bid to clear the backlog.

RTGS allows banks to transfer money between each other almost instantly (explainer here). It handling large cash payments between banks, businesses, and between house sellers and buyers. It failed to launch at 6am, following technical changes to add another bank to the system.

How the Bank of England's RTGS system works
How the Bank of England’s RTGS system works Photograph: Bank of England

CHAPS (or Clearing House Automated Payment System), which is used for house sales, was offline until around 4pm today. This left thousands of home-movers unable to complete their transactions.

In Sheffield, an 88-year old lady and her son found they were unable to move house as planned, as their removals van stood packed on the driveway.

With the systems in limbo, solicitors eventually hammered out a legal agreement to get the move underway, we are hearing tonight.

And in Great Missenden, Amanda Hart found the payment for her property hadn’t arrived. She lent the buyers the keys so they could crack on, and was left wondering how the delay would affect her own plans.

The National Association of Estate Agents has predicted a ‘cascade effect’, as thwarted house buyers are forced to cancel removals vans and delay utility work.

Housing analyst Neal Hudson points out that Monday is not the busiest day of the week for completions, but nor is it the quietest.

Housing completions by day of the week (2013) cc @graemewearden pic.twitter.com/E7dmnNLLUw

— Neal Hudson (@resi_analyst) October 20, 2014
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Bank of England: full statement

Here’s the official statement from the Bank of England:

Bank of England statement – Independent review into RTGS payment system disruption

The Governor of the Bank of England, Mark Carney, has launched a thorough, independent review of the causes of today’s disruption to RTGS, the Bank’s system for settling high value payments.

The review will cover the causes of the incident, the effectiveness of the Bank’s response and the lessons learned for future contingency plans. Its findings will be presented to Court which will then publish the full report and the response.

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Bank of England orders independent review

Just in.... the Bank of England has announced that a ‘thorough’ independent inquiry will be held into today’s system outage.

And the results will be published.

Mark Carney, Bank of England governor, orders independent review into today's system breakdown. Promises to publish report

— Jill Treanor (@jilltreanor) October 20, 2014

Time for another tale of house moving angst, this time in Colchester.

This has to be top of my 'what I don't want to happen on the day that we are moving house' list. http://t.co/9Y2Pn3iVyK #grrrrrr

— Joe Friedlein (@joe_friedlein) October 20, 2014

Joe Friedlein told the Evening Standard that his house move was on hold today:

“I don’t know what happens. We’ve got four houses in the chain and none of those (sales) can occur because the money can’t be handed around. I rang my solicitor this morning and he said that they hadn’t received any funds and that nothing had come through from my mortgage provider.

Bank of England in the spotlight over tech failure

Today’s glitch may be fixed, but it still raises serious questions over the Bank of England’s competency.

Swaha Pattanaik and Dominic Elliott of Reuters BreakingViews argue that Andrew Tyrie and the Treasury Committee need to get tough. After all, the BoE hasn’t been slow to criticise others....

Former BoE Governor Mervyn King rapped Royal Bank of Scotland for an IT bungle which affected the lender’s customers in 2012.

The Financial Conduct Authority is now investigating what happened at RBS as a result.To avoid accusations of double standards, the BoE should submit to an equally rigorous inspection.

Andrew Tyrie, chairman of the UK parliament’s treasury committee, has called for the BoE to explain itself. An internal investigation is likely, but a third-party probe would be the best way to restore confidence.

James Quinn of the Telegraph warns that the Bank can’t just cover up the incident:

What this incident serves to highlight is the fragility of the Bank’s technology platform, a fragility that has been exposed in the most public of ways, despite the Bank’s initial reticence to discuss what had occurred.

Andrea Leadsom, Economic Secretary to the Treasury, has in the past lectured retail banks on the need to increase the levels of technology expenditure.

Is it now time for the Treasury - and the Treasury Select Committee, whose chairman Andrew Tyrie last night said he was writing to the Bank to find out what had gone on - to raise the same point with the Bank itself to ensure that such an unlikely problem does not happen again

Today’s system outage must have been particularly worrying for anyone whose house sale or purchase was delayed from last week.

In The Telegraph, mortgage broker Jonathan Harris explains:

“However, with everyone pushing to complete on a Friday there are a proportion of deals which don’t happen - maybe 15pc - which are pushed back to the following Monday.

These are already critical and if they are delayed yet again, it will be hugely inconvenient for buyers.”

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MPs want answers from Bank of England

Andrew Tyrie MP. Photograph: Linda Nylind/Guardian

Parliament’s Treasury Committee will be demanding answers to find out how the Real Time Gross Settlement system, such a vital part of Britain’s financial system, could fail today.

Committee chairman, Andrew Tyrie MP, says:

“A crucial part of the UK’s financial infrastructure failed for several hours today. I will be writing to the Bank of England to find out why.

“The whole economy depends on a reliable payment system. We need to have confidence that the cause has been found and addressed.”

Could governor Mark Carney be hauled to parliament? I do hope so...

Bank of England extends opening times after fixing problem

The Bank of England has also confirmed that its Real-Time Gross Settlement system is (at last!) fixed.

They say:

The Bank of England confirms it is now processing payments through RTGS as normal. We have extended opening hours until 20:00 hrs (BST) to maximise the opportunity for settlement.

That’s not a guarantee that all the payments WILL be settled today.....

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