King demands full inquiry into NatWest fiasco

 
Ben Southwood
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SIR MERVYN King yesterday demanded that a formal investigation be launched into the RBS and NatWest technical glitch, adding to pressure on the bank and its chief executive Stephen Hester.

“Once the difficulties are over, we will need the FSA to carry out a very detailed investigation,” King argued, with the focus on “first of all, what went wrong, and then why it took so long to recover”.

A spokesman for the financial ombudsman service yesterday also advised account holders to “make a note of conversations they have, difficulties they are facing, and knock-on effects”, warning that the situation may drag on for an extended period.

Details of the technical failure have begun to emerge, with reports saying the problems started when RBS attempted last Tuesday to update a batch processing tool called CA-7.

According to a former employee, a failed update should not have been fatal, as the process is usually trivial for experienced programmers.

RBS declined to comment on reports that it is considering legal action against software provider CA Technologies.

Despite chief executive Stephen Hester’s claims to the contrary, RBS has been dogged by allegations that outsourcing and cost-cutting exacerbated or helped cause the problem.

An advertisement for CA-7 trained consultants on the Indian recruitment website Quickr, which listed RBS as the client, fuelled these assertions.

As part of its attempt to shore up its image, RBS was yesterday forced to cancel all corporate hospitality at this year’s Wimbledon tournament.