Out-Law News | 20 Oct 2014 | 4:40 pm | 1 min. read
The problem was caused during "routine maintenance" on the Bank's real-time gross settlement (RTGS) system at the weekend, a spokesperson for the Bank told Out-Law.com. The spokesperson confirmed that the problem does not stem from a cyber security issue.
The issue is affecting processing of CHAPS (Clearing House Automated Payment System) payments. The Bank spokesperson said that its system would typically handle 138,000 CHAPS payments every day, worth an average daily value of £227 billion.
"CHAPS is a real time gross settlement system," technology and payments expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said. "If money is being transferred between banks for a single payment it is moved in real time by the Bank of England between the central settlement accounts that it holds for those banks. Given the level of payments made every day this is a big issue.”
The Bank said that the backlog of unprocessed payments would be cleared when the system is back working.
"The Bank of England has identified a technical issue related to some routine maintenance of the RTGS payment system and has paused settlement while we resolve it," the Bank said in a statement. "We are working to address this issue as quickly as possible, and restart the RTGS payment system in a controlled manner. The most important payments are being made manually and we can reassure the public that all payments made today will be processed."
Financial services and technology expert John Salmon of Pinsent Masons said: "It is interesting to see the effect of a cross-industry platform going down and it shows the vital and central importance of platforms that connect to a number of institutions.”
The Bank of England, together with the FCA, has been reviewing how banks and building societies manage the risk of IT outages. It is due to report its findings early next year.