An IT error that occurred in one of First National Bank's (FNB's) payment systems last year resulted in thousands of other banks' clients being debited last weekend, as FNB irregularly reversed the double payments caused by the error.
According to Walter Volker, CEO of the Payments Association of SA (PASA), an error within FNB's inter-bank real-time clearing payment system, which has played out over a few months, was only recently discovered. He says a computer glitch - details of which are not yet known - caused "quite a few thousand" bank accounts from the major banks to be credited twice.
This weekend, FNB took action and debited the affected accounts, but without following the correct procedure - resulting in a number of irate South African bank account holders.
Procedural problem
Lee Anne van Zyl, CEO of FNB Online, says the bank reversed the transactions (of which she says there were 7 000) on Friday night, during a scheduled batch run.
"We wish to state that the recipients of these double payments were not entitled to spend the excess payment by which they were unduly enriched to begin with."
Van Zyl says, while a number of these payments exceeded the time limits in terms of the reversal process, "which has caused an inconvenience to other banks' customers", the funds remain due to FNB and the bank will continue to recover these funds.
However, Volker says FNB's method of reversing the duplicate transactions was in contravention of regulations, according to the National Payment System Act.
"If there is a duplicate transaction, the correction has to take place within the same payment system, which is not what happened in this case."
In this case, says Volker, the payments that were duplicated last year were done via FNB's real-time clearing system - but the bank turned to debit orders and the non-authenticated early debit order (NAEDO) system to reverse the double transactions. "I understand the bank used the NAEDO system on Friday, and debit orders on Saturday."
Volker notes that debit orders are not allowed to be triggered without authorisation and that FNB should have contacted other banks from which clients had been affected, in order to inform clients of an imminent payment reversal.
Volker says the computer glitch from which the problem stemmed will be the topic of a full report FNB is expected to submit to the association on Monday.
Van Zyl says FNB is now engaging with affected banks and "will ensure that the correct process is followed in terms of collecting the funds from the relevant recipients".
Update: Absa has sent this statement regarding the reversal of its clients' double payments via FNB:
"On Friday night, 15 March, FNB submitted a series of unauthorised debit orders for Absa customers, which is a contravention of the rules of the Payment Association of SA. As a responsible organisation that seeks to make its customers' lives easier, Absa, working with FNB are going to reverse these unauthorised entries on the night of 20 March. This will result in credits deposited into customers' accounts. This credit is to offset any debit that FNB raised last week Friday. Any customer that has already disputed the unauthorised transactions will already have received their credit. FNB has apologised to Absa for the event."
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