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| Bank of England payment system crashes | Bank of England payment system crashes |
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| Homebuyers were left in limbo on Monday after a Bank of England system used for transferring money failed for most of the day, raising fears that buyers would be left without keys to their new homes. | Homebuyers were left in limbo on Monday after a Bank of England system used for transferring money failed for most of the day, raising fears that buyers would be left without keys to their new homes. |
| An 88-year-old woman in Sheffield was among those caught up in the collapse of the behind-the-scenes payment mechanism, which processes about 140,000 payments worth an average £277bn a day. | An 88-year-old woman in Sheffield was among those caught up in the collapse of the behind-the-scenes payment mechanism, which processes about 140,000 payments worth an average £277bn a day. |
| The system failed to open at 6am and remained shut until 3.30pm – usually the cut-off point for money to be transferred for house sales. The Bank of England, which did not announce the shutdown for more than four hours after the system had been due to open, was forced to extend opening hours by four hours to 8pm to clear the backlog of payments. | The system failed to open at 6am and remained shut until 3.30pm – usually the cut-off point for money to be transferred for house sales. The Bank of England, which did not announce the shutdown for more than four hours after the system had been due to open, was forced to extend opening hours by four hours to 8pm to clear the backlog of payments. |
| While the clearing house automated payment system (Chaps) was down, there were fears that homebuyers and sellers around the country would be left unable to complete purchases on time and that big businesses, which also use the system, would fail to make payments. | While the clearing house automated payment system (Chaps) was down, there were fears that homebuyers and sellers around the country would be left unable to complete purchases on time and that big businesses, which also use the system, would fail to make payments. |
| MPs demanded answers to the outage which prompted the Bank of England governor, Mark Carney, to order a “thorough, independent review of the causes” of the problem and to promise to publish the findings. Only weeks ago the Bank said it had a new contingency plan for the collapse of the payments system. | |
| Estate agents were among the first to raise concerns, with the National Association of Estate Agents warning of the “cascading” effect of the delay on payments scheduled for later in the week, and a knock-on effect on van hire and transferring gas and electricity services. | Estate agents were among the first to raise concerns, with the National Association of Estate Agents warning of the “cascading” effect of the delay on payments scheduled for later in the week, and a knock-on effect on van hire and transferring gas and electricity services. |
| Kaye Orwin of Andersons estate agents in Sheffield had been dealing with two families aiming to complete their moves. She said her day had started with a call from solicitors to say that “money had been put in the system from the purchase at the bottom of the chain but then it couldn’t come out”. | Kaye Orwin of Andersons estate agents in Sheffield had been dealing with two families aiming to complete their moves. She said her day had started with a call from solicitors to say that “money had been put in the system from the purchase at the bottom of the chain but then it couldn’t come out”. |
| By 4pm, when the money had still not been transferred, the solicitors arranged a legal undertaking agreeing that payments would be made as soon as the system recovered. This allowed the buyers to get their keys. | By 4pm, when the money had still not been transferred, the solicitors arranged a legal undertaking agreeing that payments would be made as soon as the system recovered. This allowed the buyers to get their keys. |
| The sellers who were next up the chain, an 88-year-old woman and her son, were already packed when things went wrong. “The removal van was sat on the driveway,” said Orwin. “We’ve opened the garage and they are putting things in there for now. The buyers at the bottom of the chain have to be out of their rental home today.” She said that in more than 20 years of selling homes she had never experienced this kind of problem. | The sellers who were next up the chain, an 88-year-old woman and her son, were already packed when things went wrong. “The removal van was sat on the driveway,” said Orwin. “We’ve opened the garage and they are putting things in there for now. The buyers at the bottom of the chain have to be out of their rental home today.” She said that in more than 20 years of selling homes she had never experienced this kind of problem. |
| “It is stressful enough moving house anyway without this kind of thing happening.” | “It is stressful enough moving house anyway without this kind of thing happening.” |
| Other sellers and buyers took matters into their own hands. In Great Missenden, Buckinghamshire, Amanda Hart let her buyers borrow the keys even though the money had not arrived. “It’s an inconvenience, and I’m bugged and annoyed,” she said. “There were purchases that I was going to make today with these funds, which I can’t now make. And there are creditors I was going to pay off, which could mean another day’s interest.” Hart, who is moving in with her partner, is not trapped in a chain. | Other sellers and buyers took matters into their own hands. In Great Missenden, Buckinghamshire, Amanda Hart let her buyers borrow the keys even though the money had not arrived. “It’s an inconvenience, and I’m bugged and annoyed,” she said. “There were purchases that I was going to make today with these funds, which I can’t now make. And there are creditors I was going to pay off, which could mean another day’s interest.” Hart, who is moving in with her partner, is not trapped in a chain. |
| Banks also took steps to alleviate any problems. Barclays said it usually processed transactions 24 hours early for homebuyers while Royal Bank of Scotland said that payments for five customers it knew were facing difficulty were processed through a different system. Nationwide building society said it had staff working late to make sure that payments went through. | |
| It was not immediately clear how many people were affected by the glitch but last October nearly 2,500 house purchases a day were completed on a Monday, according to analysis of Land Registry data by Neal Hudson at property firm Savills, making Monday the third most popular day of the week to move house. Transaction levels are up markedly on 2013, suggesting more deals will have been caught in the chaos. | It was not immediately clear how many people were affected by the glitch but last October nearly 2,500 house purchases a day were completed on a Monday, according to analysis of Land Registry data by Neal Hudson at property firm Savills, making Monday the third most popular day of the week to move house. Transaction levels are up markedly on 2013, suggesting more deals will have been caught in the chaos. |
| Chaps is a crucial part of the financial system, processing 92% of transactions between banks, and is used in large-value transactions. The average payment is £2.1m. It is unusual for it to be out of action for almost an entire day. It was shut for six hours in 2007 and briefly last year. | Chaps is a crucial part of the financial system, processing 92% of transactions between banks, and is used in large-value transactions. The average payment is £2.1m. It is unusual for it to be out of action for almost an entire day. It was shut for six hours in 2007 and briefly last year. |
| Andrew Tyrie, who chairs the Treasury select committee of MPs, said he would be writing to the Bank to demand answers. | Andrew Tyrie, who chairs the Treasury select committee of MPs, said he would be writing to the Bank to demand answers. |
| “A crucial part of the UK’s financial infrastructure failed for several hours today,” he said. “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.” | “A crucial part of the UK’s financial infrastructure failed for several hours today,” he said. “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.” |
| The Law Society was also concerned. Its vice-president, Jonathan Smithers, said: “We are talking to the relevant bodies to see if we can obtain some understanding of why the system has failed and assurances that this will not occur again.” | The Law Society was also concerned. Its vice-president, Jonathan Smithers, said: “We are talking to the relevant bodies to see if we can obtain some understanding of why the system has failed and assurances that this will not occur again.” |
| The systems for processing direct debits and internet transactions are not affected by the problem at Chaps, which is thought to have been due to an attempt to add a new bank to Chaps over the weekend. | The systems for processing direct debits and internet transactions are not affected by the problem at Chaps, which is thought to have been due to an attempt to add a new bank to Chaps over the weekend. |
| The Bank of England gave few clues other than to say at 11.15am that it had been hit by a technical issue “related to some routine maintenance of the RTGS (real-time gross settlement system)”. By 4.05pm it said the system was working and would extend hours to “maximise the opportunity for settlement”. It has a backup system but did not use it. | The Bank of England gave few clues other than to say at 11.15am that it had been hit by a technical issue “related to some routine maintenance of the RTGS (real-time gross settlement system)”. By 4.05pm it said the system was working and would extend hours to “maximise the opportunity for settlement”. It has a backup system but did not use it. |
| Chaps said it was confident that all payments submitted would be processed. “To help customers and to ensure payments can be processed today Chaps is extending its operating times until 19.40,” the service said on Monday. “Customers are advised to contact their own bank for any queries they may have on their specific payments.” | Chaps said it was confident that all payments submitted would be processed. “To help customers and to ensure payments can be processed today Chaps is extending its operating times until 19.40,” the service said on Monday. “Customers are advised to contact their own bank for any queries they may have on their specific payments.” |