Back office bodge-up costs HBOS £750,000.
The £750,000 fine given to banking giant HBOS by the Financial Services Authority, was due to problems over the upgrading of back office IT systems, writes Gareth Morgan.
The problems arose when the Bank of Scotland was carrying out upgrades to its bespoke investment management system, Lisa, as part of its year 2000 compliance work.
The upshot of the bodged work was that 5,500 account holders did not receive money they were owed. A spokesman for HBOS confirmed that the glitch caused by the upgrade work, which took place in October 1999, meant that the accounts had to be updated manually.
‘This took longer than we hoped. But we have learned valuable lessons,’ said the spokesman.
All the customers were compensated for their loss, but the amounts they received were only on average 50 pence per account.
The FSA said pay outs were so small because of the value of shares at the time. In a statement, it said: ‘In different circumstances the amount could have been much higher.’
The FSA has stressed the importance that financial institutions should place on their infrastructure. ‘In the current climate, some firms may be tempted to cut back on investment in back office systems – this would be extremely short-sighted,’ said Andrew Procter, director for enforcement at the FSA.