Computer Glitch Delays Mortgage Completions

by Mark Johnston

We all know how much we panic when we hit the wrong button on the computer, it does not however usually result in messing up the finances of millions.

This is what happened just recently when technicians at Natwest tried to update the banks software and it then failed, so did attempts to go back to its original version, therefore causing a huge volume of transactions to not be completed.

The bank managed to fix the ‘glitch’ relatively quickly, but it had then created a backlog of around 100 million transactions, thus causing a huge knock on effect for the banks own customers and beyond.

There has been a report that at least one couple claim to have seen a house purchase collapse due to their payment not going through on time. Mark Groom, of Groom Halliday property solicitors, said “if we can not see the money, whether or not it is actually there, a property sale simply can not complete”.

It is not yet known how many transactions exactly were hit by the chaos, but the number is substantial.

Natwest have now stated that the vast majority of problems have now been cleared, but the knock on effects could include problems with charges for late payments and issues with credit ratings, although these will not come to light until as late as next month.

David Cresswell, of the financial ombudsman service, said “the knock on effect of the crisis will take a long time to put right”. He therefore urges people to keep a record of what is happening with their bank accounts.

Sir Mervyn King, the governor of the Bank of England added that there will be a “very detailed” investigation in to the computer glitch.

For more than a decade now banks have been encouraging their customers to mange their accounts and carry out transactions online, but the Natwest fiasco has now demonstrated just how fragile this level of dependency on the web and computer networks makes us.

This so called ‘glitch’ is not alone, in ate 2011 and yet again in May this year HSBC customers were unable to withdraw cash due to a computer malfunction.

Even more recent, 23 Lloyds TSB customers due to complete on Cheltenham and Gloucester mortgages were left in limbo due to a computer glitch that stopped money being transferred to solicitors.

The bank however said that this was “an isolated problem, but the money had now been cleared, allowing borrowers to make their purchasers”.

A spokeswoman for Lloyd’s group stated that the cause of the problem had been located and fixed and that there were no continuing problems in processing mortgages.

Daoud Fakhri, senior analysts at consultancy Datamonitor financial services, stated “these episodes are emblematic of wider problems facing the banking sector as a whole”.

Ralph Silva, of SRN, a research consultancy, said “banks are cutting the amount they spend on systems and software and trying to build more of the infrastructure in house. This is resulting in a cobbled together system that is more likely to go wrong”

 



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