Global Spotlight: United Kingdom

Among the hottest topics in B2B payments in the U.K. today include late payments to small suppliers and the nation’s flourishing alternative lending sector. But last Friday (Aug. 28), the nation caught the world’s attention for a bit of a snafu: HSBC, one of the U.K.’s Big Four mainstream banks, dropped the ball and left thousands of employees without their paychecks ahead of the bank holiday.

Reports by The Guardian revealed that an IT glitch in HSBC’s banking system meant the bank failed to process payments made by their corporate customers. That meant that businesses with an HSBC banking account could not issue payroll to their employees, leaving about 275,000 without pay on Friday.

[bctt tweet=”Businesses with an HSBC banking account could not issue payroll to their employees, leaving about 275,000 without pay on Friday.”]

“There has been a fault in the information used to process some payments from HSBC business customers,” the institution said in a statement. “We are taking immediate steps to ensure the payments reach beneficiaries as quickly as possible. We will work with other banks to ensure that customers do not lose out as a result of today’s problems.”

The glitch had reportedly affected more than just payroll for corporate clients. Some businesses said they were unable to pay their suppliers, with online banking services halted.

“I can’t pay any of our suppliers at the moment,” said business owner Charlotte Abbot in an interview with The Guardian.

In an interview with the BBC, accountant Mathew Robinson said his business’ B2B payments were also interrupted. “It’s also a problem for our suppliers. We have over 100 suppliers, and they’re not getting payments from us,” he told reporters. He added that HSBC had been “appalling” in how it handled the matter.

Luckily, by Saturday, HSBC announced that the issue was solved. “We have now processed all outstanding payments following yesterday’s problem,” the bank stated. According to HSBC, the issue stemmed from a software malfunction with its BACS e-payments processing system, though reports said no further details were given.

According to reports, HSBC initiated communication with the Bank of England, as well as the Financial Conduct Authority, regarding the issue, though it is unclear whether authorities will take action.

“The FCA is in contact with HSBC regarding the issue,” the agency said in a statement. “We will be working closely with the firm as it resolves the problem and to ensure there are steps in place to help consumers affected.”

Despite the quick response, HSBC’s lapse in corporate payment processing brought up larger issues for some. Consumer advocate group Which? told reporters that the situation raises questions about whether banks are adequately maintaining their payments technology systems.

“It’s essential regulators continue to take tough action to ensure banks properly maintain the payments system we rely on, and we expect HSBC to fully compensate anyone affected,” said Which? Executive Director Richard Lloyd in a statement, according to the BBC, on Friday, when the glitch was still preventing payment processing.

The publication said that others are similarly distraught about the issues the software malfunction may raise in B2B payments among mainstream banks.

“Banks have suffered a series of unacceptable failures with their IT systems in recent years, and this latest one at HSBC will do little to reassure consumers that banks are making improvements,” Lloyd added.

“This appears to be yet another serious IT failure by one of the major clearing banks,” said Treasury Select Committee Chairman Andrew Tyrie, referencing previous payment processing problems by HSBC. According to reports, last June, RBS, another member of the Big Four, endured a similar issue when it failed to process wage, tax credit and disability allowance funds to its customers.

Tyrie told the BBC that he would be writing a letter to the HSBC to ensure that business customers would not be losing money from the glitch,and to ask that HSBC ensure this situation does not happen again.

“It is increasingly clear that most, if not all, of these banks’ IT payments systems need a good deal of investment, and there is a lot to put right,” Tyrie added.