Banks work around slow legacy systems

Payments Technology

Banks work around slow legacy systems

Karl Flinders

The Payments Council is addressing a shortfall in how Faster Payments and legacy systems process payments, to prevent consumers being charged £200m a year in penalties.

From September, if payments fail due to a lack of funds being cleared, banks will process them for a second time in a day, allowing consumers to ensure funds are in their accounts. 

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While legacy systems process payments early in the morning, Faster Payments are processed, in seconds, throughout the day. This means a customer's payments might not be paid, despite funds being paid to their account, but not cleared.

To remedy this, banks will retry the payments later in the day. The Payments Council has set 2pm as the time to retry the payments, but banks can do it later.

This is further evidence that legacy systems are struggling to keep pace with IT advances, which are seeing real-time payments being paid by consumers from multiple platforms.

“We are pleased to see this extension to the retry system, first introduced in April 2013, helping more customers to avoid penalty charges,” said Clive Adamson, director of supervision at the Financial Conduct Authority (FCA).

"We estimated that under the old system, people were incurring £200m in penalties, so this change can have a big impact on consumers’ banking experience," he added.

Jemma Smith, director of communications and education at the Payments Council, said the new process acts like a safety net, giving consumers a chance to put things right by paying in cleared funds. 

“However, if you find yourself regularly taking advantage of the retry process, I’d strongly recommend reviewing the timing of your payments so they leave your account on a more suitable day,” she added.

The payments sector is evolving fast and the FCA is planning to open up the payments sector to new companies, to improve competition. In April 2015, the FCA will appoint a new regulator for the payment-systems sector, which processes £75tn a year.

The increasing number of payments being made, via channels including mobile and online, has seen an increased number of banking glitches. These are the result of the creaking IT systems underpinning the processes.


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