(Bloomberg) — The Bank of England said CHAPS transactions are settling normally after earlier warning that some home sales had been delayed after the service — one of the largest high-value payment systems in the world — was affected by a global payments issue.
The issue with CHAPS had caused some large, time-sensitive payments to be delayed across the country, the central bank said in an earlier statement. The real-time network connects banks and is meant to provide an efficient way to handle high-value payments in the UK.
“We expect that all payments received by the Bank today will be settled by the end of the day,” the Bank of England said in a statement.
The outage risked upending the UK’s home buying process as conveyancers rely on receiving money through the network in order to give new homeowners the keys to their properties.
A “CHAPS collapse could leave hundreds of homebuyers out in the cold,” said Anthony Codling, an analyst at Royal Bank of Canada. “The completion delays don’t just impact the buyer but also all those in the chain.”
The Bank of England assumed responsibility for the CHAPS system in 2017 and since then CHAPS has become a crucial cog in the UK’s financial system. Even though it handles just 0.5% of total payments in the country, it now processes about £350 billion in payments every day and turns over the equivalent of the UK’s annual gross domestic product every 6 working days.
“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,” said Toby Leek, president of NAEA Propertymark.
The system relies on the Bank of England’s real-time gross settlement infrastructure as well as SWIFT, the messaging system used by financial institutions globally to convey instructions to carry out tens of millions of transactions each day.
Thursday’s issue was related to SWIFT, according to people familiar with the matter. A representative for SWIFT did not have an immediate comment when reached by email.
There are nearly three dozen banks that are considered direct participants in CHAPS from international banks like Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. to the giants of UK banking like Barclays Plc and Lloyds Banking Group Plc.
Retail payment systems were unaffected by the outage, meaning consumers can use cash points, card payments and bank transfers as normal, the central bank said.
In 2014, the BOE suffered a major payment system outage that delayed tens of thousands of transactions. Complaints were made to the BOE by 36 people and the BOE paid £4,056.89 compensation to nine of them.
–With assistance from Damian Shepherd, Jack Sidders and Aisha S Gani.
©2024 Bloomberg L.P.
