Credit records in the aftermath of RBS/Natwest system problems

5th July 2012

The problems experienced by clients of RBS, Natwest, Ulster Bank and thinkbanking have been well documented in recent days. A disastrous system update at RBS left many clients in a serious predicament. Some loan payments were taken twice, balances failed to update after transactions, and many people couldn’t access their wages or pay important bills.

The worry and practical problems caused were clearly severe, though thankfully (most) clients have now got normal service restored. Minds are now turning to some of the consequential issues that may flow onwards from this banking disaster. In particular many people will be concerned about their credit rating if the systems problem meant that their payments were not made to lenders on time.

This will be of particular concern to RBS, Natwest, Ulster Bank and thinkbanking clients who are working hard to re-establish a positive credit rating following the completion of debt solutions such as a Scottish trust deed, sequestration (bankruptcy), or a debt arrangement scheme. Much delicate hard work might be undone if important payments were missed or paid late as a result of problems that were out of their control.

Experian (the credit reference agency) have produced some information that may be of interest to affected clients of these banks.

It appears that clients of RBS, Natwest, and Ulster bank should not expect to see their own bank report them to credit reference agencies for current account issues (which were out of their control) like exceeding an overdraft limit, bouncing a cheque or failed payments such as standing orders or direct debits. Of course, this is the very least that such clients would expect. Thinkbanking clients are unlikely to have overdraft facilities so are unlikely to have been affected in this way.

Experian do however suggest that people monitor their credit record at this time to ensure that this hasn’t happened. The bank concerned should rectify any such issues if they have occurred. One way to access your credit report is via the free trial that can be accessed on this site.

The next area of difficulty is where other banks (or other organisations) have failed to be paid on time through no fault of the RBS, Natwest, Ulster Bank or thinkbanking client. Will they report the matter to credit reference agencies which will then have an adverse effect on your credit rating?

Experian suggest that affected clients stay in regular contact with their creditors to let them know that any missed or late payments were matters that were out of their control. It’s hoped that creditor organisations will be exercising discretion at the current time given the problems that have been created; keeping them up to date with the facts may well be beneficial in helping to make sure that this is the case.

Keeping an eye on your credit record is also likely to be a sensible measure for affected clients. If you spot a problem that may affect your credit rating, you may want to plead your case to the lender concerned and ask that they remove negative reporting for events that were outside of your control.

What if they refuse? Sadly you may not be able to force the issue with them. That may then leave you questioning how exactly you expect RBS, Natwest, Ulster Bank or thinkbanking to put the matter right (or compensate you in some way) for damage to your credit rating that may be costly in the future as well as being grossly unfair.

This problem was clearly made by RBS Group alone. Given the appalling regard in which the banking industry is currently held by the public, it’s hoped that the whole UK finance industry will work together positively to make sure RBS Group clients don’t suffer credit rating damage unfairly. That would be one good news story for all UK banks that could emerge from this mess.

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