WHEN COMPENSATION IS INADEQUATE

Even at his best, Charles Dickens might have struggled to come up with a plot that features a bank offering to give away £10 million of cash, only to find that those entitled to a share of the spoils are enraged.  But that’s what’s happening at Ulster Bank, part of the Royal Bank of Scotland group. The bank is offering £20 (or €25) to some 500,000 Irish customers to say ‘sorry’ after its IT system went rogue and held customers’ cash hostage for weeks.

“I’m afraid the machine is holding your cash hostage”

As IT meltdowns go, this one was spectacular and slightly sinister. Salaries paid in at one end failed to make the journey to the other, hindering the rightful owners from easily paying for luxuries like food, petrol, mortgages or a bottle of Pinot Noir on a Friday night.  In extreme cases, some were unable to exchange on homes and car sales.

With the IT system failing to co-operate, cashpoints effectively became cashless. The only way affected customers could get access to their cash was to drive into the nearest town, find and pay for a parking spot and do something few of us do very often these days – they walked into a bank branch where they shouted, swore, and finally begged the bank teller.

The bank is now offering £20 to each customer affected for any inconvenience caused.  The inconvenienced are ungrateful and livid. £20, incidentally, is what the bank automatically charges customers who go one penny into an unauthorised overdraft.

If the customers are out of pocket as a direct result of the IT system collapse, and they can produce documentary evidence to back it up, they can make an additional claim for costs.

Speaking about the offer, Jim Brown, Ulster Bank chief executive, rejected claims that the compensation package was “too little too late”. “I’m happy with it. I think it goes far enough,” he said.  Mr Brown will forfeit his annual bonus because of the fiasco, which might explain why he thinks it’s ‘enough’.  The question of why he thinks he’s entitled to an opinion on whether the inconvenienced should be happy was left unanswered.

Would it have mattered if the compensation offer was £30 or £50, or even £100?  I suspect not.  People were weary with bankers’ behaviour long before the IT system turned roguish. This was just another kick in the unmentionables for people who helped bail out the banks, including RBS, only to learn of a litany of misconduct and wrongdoing ever since.

Charitable donations compensate for a multitude of sins

So what’s a bank to do?  Well, the bank could have said that there is simply no way it could compensate its customers adequately for the aggravation they’ve endured, but that in recognition, the bank would donate £10 million across 20 different local charities. This money, the bank could say, would be paid in the name of its loyal but disrupted customers. Not everyone would have been delighted, but only the most hard-hearted would have complained publicly if sick children, malnourished animals, the disabled or the elderly were benefitting directly.

Imagine the press pictures of large, mocked up cheques being handed over to a children’s nurse or an elderly, wheelchair bound lady, with Ulster Bank’s regional managers looking on, magnanimous.

Too cynical?  Perhaps.  But each charity would benefit infinitely more from a £500,000 donation than any individual customer will from an unexpected £20 note. For the bank, a negative position could have been turned into a positive opportunity.

It appears the RBS Group has yet to fully accept that it owes a huge debt to society. Unless the banks acknowledge that their corporate reputations are in the gutter, and that the actions of their bankers put them there, they will have little motivation to think differently.

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