The Bank of England recently reported a glitch with the CHAPS service which delayed house purchases and other high-value payments. They have confirmed that the third party supplier has restored service and CHAPS payments are settling as normal.
Officials stated that the outage affected “some high-value and time-sensitive payments, including some house purchases.” This is the third reported issue with CHAPS since 2014, with the last outage occurring in August of the previous year. Sources from the Bank of England have identified the problem as a “global issue” related to Swift technology, a global payments technology company. A source close to Swift confirmed that the outage was not due to a cyber attack. The Bank of England released a statement saying:
“A global payments issue is affecting the Bank’s CHAPS service and delaying some high-value and time-sensitive payments, including some house purchases.”
A spokesman added that they were “working closely with a third-party supplier, industry, and other authorities to resolve the issue as promptly as possible”. Homebuyers were said to be facing a “nightmare scenario,” according to brokers. Hannah Bashford, director of Model Financial Solutions, warned that those looking to complete house purchases today might be “left high and dry with nowhere to move to if funds aren’t passed through the system in time to complete.”
The Bank of England reassured that the issue was not affecting ordinary debit and credit payments, cash points, or bank transfers.
On an average day, CHAPS processes 200,000 payments in the UK, totalling £363 billion. Financial institutions heavily rely on the CHAPS system for transferring money between them, making it essential for high-value transactions like house completions and car purchases.
Andrew Montlake, from mortgage broker Coreco, stated the potential impact on homebuyers and said:
“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.”
Toby Leek, NAEA Propertymark President, commented:
“Completing on a property can be extremely stressful even without technical issues, however it is important to remember that should systems ever cause unexpected problems at a vital moment within the transactional process these issues do tend to be fixed quickly. 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.”
Anthony Codling, RBC Capital Markets said:
“The CHAPS collapse could leave hundreds of homebuyers out in the cold. The breakdown of the payments system is impacting high value transactions such as house purchases, on average there are around 4,000 housing transactions a day. If conveyancers don’t get the money, they can’t release the keys, and the completion delays don’t just impact the buyer but also all those in the chain. Those caught out in the cold will hope that the sunny warm weathers will last longer than forecast.”
Joe Pepper, UK CEO of PEXA said:
“Home buyers having a payment ‘glitch’ hold their transactions up is yet another proof point that the technology and infrastructure supporting the market is no longer fit for purpose. It is creaking at the seams. Buying a home is a stressful and laborious enough experience as it is for consumers without it being compounded by payments falling through or getting held up.
Digitisation cannot come soon enough. With new regulation putting consumer outcomes front and centre, it is imperative that we see the adoption of new, reliable technology that improves the experience for home movers and remortgagers, speeding up transaction processes from days to minutes.
Working with the Bank of England, we have built an entirely new payment system for the housing market – an alternative to CHAPS – and we are working to embed this with the industry. We believe having a scalable system that can reliably handle peaks in demand will future proof the housing market, preventing this type of issue from recurring.”
One Response
HSBC regularly stop our CHAPS payments because of the bank’s suspicion of fraud activity. One payment was to HSBC in repayment of a mortgage! The bank refuse to explain why fraud is suspected and say it is acting in accordance with banking policy. Our clients have been left to worry why sale proceeds have not been received and we have lost thousands of pounds in costs but HSBC don’t care.