Bank Of England expects delayed payments to be settled today after hitch

By Philip Aldrick

No households are expected to be affected by the failure of a critical Bank of England payments system earlier today, the UK central bank said in an updated statement.

Thousands of homebuyers and other financial transactions were briefly delayed after the BOE’s Real-Time Gross Settlement service went down for six hours this morning.

CHAPS, the payment system used for high value transactions including property sales, was also knocked out because it runs on RTGS.

RTGS settles on average £775 billion ($981 billion) a day of electronic transfers between banks. CHAPS clears £380 billion in 200,000 transactions on average every day.

 

“The issue has been resolved and all CHAPS payments submitted to the bank are settling normally,” the BOE said in a statement late Monday. “We do not anticipate that there will be any outstanding payments to settle when we close the system this evening.”

The outage from 6am to noon was the longest system crash since 2014, which prompted the BOE to launch an official inquiry into the shutdown. The issue on Monday was “a technical issue” unrelated to an ongoing RTGS upgrade, according to a person familiar with the matter, who requested anonymity disclosing details of the stoppage.

As most property transactions are lined up to complete first thing in the morning, there was a risk that the backlog might not be cleared before CHAPS closed at 6 p.m.

Maintaining RTGS is one of the bank’s core responsibilities, because it is central to financial stability in the UK.

The last major outage was in 2014, when RTGS went down for nine hours. Back then the BOE ordered an external review which found that approximately 700 housing transactions were delayed by a day. The BOE paid more than £4,000 in total to nine people in compensation, the report found.