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Carney launches review Chaps payment system outage

Carney launches review Chaps payment system outage

The Bank of England governor, Mark Carney, has launched an independent review into the worst disruption of Britain’s banking payment system, the Chaps payment system, in seven years.

The BoE said part of its real-time gross settlement system (RTGS), which underpins large

A diagram showing the Chaps payment system

Mark Carney launches review after BoE payment system crash

transfers between bank accounts, had been “paused”, after routine maintenance – reports the FT.

The breakdown meant the Chaps payment system, which last year processed £277bn of transactions a day, was down for more than nine hours. The bank was forced to start processing the most important payments manually.

Other parts of the RTGS network for smaller transfers, including direct debits, standing orders and the faster payments system, functioned normally.

The bank later issued a terse two-sentence statement on Monday afternoon saying it had restarted payments through RTGS as normal. Opening hours for the system were extended until 8pm BST “to maximise the opportunity for settlement”, it added.

Mr Carney said the review into the breakdown would cover the causes of the incident, the effectiveness of the bank’s response and the lessons learnt for future contingency plans.

The BoE did not provide any details of the nature of the failure or say what had caused it. However, experts said the interruption of such a significant piece of financial infrastructure was a serious matter.

Thomas Huertas, a partner at professional services firm EY, said: “Given it is the artery of the financial system in the UK, for it to go out of commission for any length of time is more than inconvenient”.

Andrew Tyrie MP, chairman of the Treasury committee, said he would be seeking an explanation from the BoE. “The whole economy depends on a reliable payment system. We need to have confidence that the cause has been found and addressed,” he said.

Transactions affected included house purchases, where mortgage advances and payments between the parties are usually settled using the Chaps system. But Chaps is also used in big corporate transactions.

In 2012-13, the average payment size was £2.1m, while about 78 per cent of transactions were under £100,000. In 2013, Chaps was processing on average 138,000 payments a day.

The BoE has frequently emphasised how important the payment system is, boasting of the improvements it had made to RTGS in 2013 “to further increase resilience” should the system fail. In the central bank’s annual report this year, the BoE said: “RTGS was available for 100 per cent of its operating hours in 2013, as in 2011 and 2012”.

However, these are not the first computer problems the bank has faced with its payments systems. There was a six-hour outage to RTGS back in 2007.

In September, technical problems beset the BoE but its back-up operations worked. At the time, it put up a notice regarding such failures, saying “there is no impact on critical payment and settlement services. Alternative procedures are in place where necessary.”

The BoE operates RTGS from two sites in London, in order to ensure that it has back-up if one goes down.

The central bank recently established a “disaster” contingency arrangement, called “Mirs”. This recovery system was designed to settle payments should the bank’s main infrastructure stop working. Mirs could be used as a back-up if ab issue with Chaps was not resolved within a few days.

 

The post Carney launches review Chaps payment system outage appeared first on Payments Cards & Mobile.

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