A banking system failure risked thwarting plans for thousands with scheduled house purchases ahead of the weekend. An investigation was prompted due to a grim warning over a system failure issued by The Bank of England on Thursday, which coincided with a breakdown in global money transfers.
The setback seems unrelated to the major worldwide computer system crash affecting airlines, GPs, broadcasters and others earlier today. The root of this problem was traced back to Swift, a critical global financial system that facilitates swift money transfers.
Consequently, The Bank of England sounded the alarm over potential impacts on payments conducted via the CHAPS system, which is utilised by notable UK High Street banks as well as international lenders. The technical glitch was eventually fixed on Thursday evening, but not before it unsettled an unknown number of property transactions set to complete before the weekend.
Finance professionals suggested these events call into question the sturdiness of the global and UK payment systems. Toby Leek, president of NAEA Propertymark, conceded: “Completing on a property can be extremely stressful even without technical issues.”
While noting that such complications are typically rectified quickly, he cautioned: “The flipside is in the short term, this can have the potential to leave people waiting outside their new property with a removal van full of their belongings in very extreme cases.”
Katy Eatenton, a Mortgage & Protection Specialist at Lifetime Wealth Management, said to Newspage: “This is possibly the single worst banking issue that could happen for house purchases.” Chris Barry, Director at Thomas Legal, cautioned: “For many, this has just made an already stressful day even more stressful.” Harps Garcha, Director at Brooklyns Financia, highlighted that the system failure posed a real risk of people being stranded outside their new home without the right to take ownership.
Andrew Montlake, Managing Director at Coreco, commented to say: “This has the potential to be a nightmare scenario for home buyers on the day of completion, potentially leaving them and their removal vans all packed up with nowhere to go. The home buying process relies on this system.”
Simon Bridgland, Director at Release Freedom, predicted: “I can see many anxious calls to solicitors and removal firms.” Craig Fish, Director at Lodestone Mortgages & Protection, described the matter by saying: “This is a disastrous situation and has the ability to change what should be a dream day into a nightmare.”
Swift explained that the problem had been caused by “an operational incident”, which did not appear to be the result of hacking. It stated: “We are in contact with our customers to support them in mitigating the consequences on their operations and in turn on their own customers’ transactions.”
The issue did not affect ordinary debit and credit payments, cash machines or bank transfers. The Bank of England has assured that all outstanding payments scheduled via the CHAPS system will be processed by the end of Thursday. They have advised concerned individuals to get in touch with their bank if they have any worries about a CHAPS payment.
The Bank stated: “We are pleased to confirm that the third party supplier has restored service following their earlier issues, and CHAPS payments are settling as normal.” CHAPS, which stands for Clearing House Automated Payment System, is widely used by banks and lenders for large-scale money transfers.
In the UK, the system handles around 200,000 transactions daily, amounting to £363bn. It’s also commonly used by individuals for significant payments, such as buying houses or cars, with an average of about 4,000 housing transactions each day.