The Bank of England apologised last night after a crucial payments system collapsed, forcing Mark Carney to launch an urgent investigation following the delay of hundreds of thousands of payments, including for homebuyers waiting for money to be transferred to pay for their new homes.
The Bank of England governor promised a “thorough, independent review” after MPs demanded answers into how the system which processes payments worth an average £277bn a day had failed for nearly 10 hours.
An 88-year-old woman in Sheffield was among those caught up in the collapse of the behind-the-scenes payment mechanism, which 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 did not admit the shutdown had taken place for more than five hours after the system had been due to open, and was later forced to extend opening hours by four hours to 8pm to clear the backlog of 143,000 payments.
More than 10 hours after first admitting to the problem with the clearing house automated payment system (Chaps) the Bank of England eventually apologised “for any problems caused by the delays to the settlement system”.
While 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.
Only weeks ago the Bank said it had a new contingency plan for the collapse of the payments system. The Bank of England will subject the system to additional monitoring when it reopens at 6am on Tuesday.
The systems for processing direct debits and internet transactions are not affected by the problem, which is thought to have been due to an attempt to add a new bank to Chaps over the weekend.
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”.
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, the 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.”
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.
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. It was not immediately clear how many homebuyers 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 key part of the financial system, processing 92% of transactions between banks in terms of value, and is used in large-value transactions.
The average payment is £2.1m. It is rare for it to be out of action for almost a whole day. It was shut for six hours in 2007 and briefly last year.
theguardian.com
The Bank of England governor promised a “thorough, independent review” after MPs demanded answers into how the system which processes payments worth an average £277bn a day had failed for nearly 10 hours.
An 88-year-old woman in Sheffield was among those caught up in the collapse of the behind-the-scenes payment mechanism, which 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 did not admit the shutdown had taken place for more than five hours after the system had been due to open, and was later forced to extend opening hours by four hours to 8pm to clear the backlog of 143,000 payments.
More than 10 hours after first admitting to the problem with the clearing house automated payment system (Chaps) the Bank of England eventually apologised “for any problems caused by the delays to the settlement system”.
While 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.
Only weeks ago the Bank said it had a new contingency plan for the collapse of the payments system. The Bank of England will subject the system to additional monitoring when it reopens at 6am on Tuesday.
The systems for processing direct debits and internet transactions are not affected by the problem, which is thought to have been due to an attempt to add a new bank to Chaps over the weekend.
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”.
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, the 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.”
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.
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. It was not immediately clear how many homebuyers 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 key part of the financial system, processing 92% of transactions between banks in terms of value, and is used in large-value transactions.
The average payment is £2.1m. It is rare for it to be out of action for almost a whole day. It was shut for six hours in 2007 and briefly last year.
theguardian.com
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