Royal Bank of Scotland software glitch – Dean Dunham explains your rights

So the question on everyone's mind now is "Are the banks liable?" Let me answer this, yes, of course they are. However, it is of course not going to be as straightforward as this is some cases, for example what if:

• You suffer as a result of the banks glitch but you are not actually a customer - for example: your employer is a Natwest customer and couldn't therefore pay your salary
• You miss your airplane because you could not draw money from your bank account to get the train to the airport
• You miss your mortgage payment and as a result get charged a penalty

Let me explain your relationship with the bank in a way that many have probably not considered before:

if you pay money into the bank and as a result you have a "positive" bank balance the effect is that you have "loaned" the bank money and a contract has been formed. This contract is governed by the bank's terms and conditions which clearly state that:

1. the bank will pay you interest on the loan and
2. that the "repayment date" (that is the date when the bank has to repay you) is the moment that you demand the money by using your debit card.

This therefore means, in its simplest terms, that they moment that you demanded your money (by using your card) and the banks did not honour this, that they were simply in breach of contract.

Now, because the banks are in breach of contract in this situation it means that you have a claim and in law the starting point is that the bank must "put you back in the position that you would have been in had the breach not occurred". You will see why RBS have posted on their website and why their spokespersons have been saying all day that "No one will be out of pocket".

So what does this actually mean? Well, it means that if you missed a mortgage payment because of the glitch and therefore get charged interest, that the bank has to reimburse you –  if this glitch had not happened you would not have missed the payment. In the example about regarding your salary, it would be your employer that would have the claim against the bank and in turn you would claim against your employer.

In the above circumstances I have no doubt that the bank will pay out, they have therefore put their hands up and have been saying that they will compensate in these circumstances.

However, the real issues will arise where customers say that they suffered "consequential" loss, which is a loss that resulted as a consequence of the bank glitch. My scenario above about the customer missing the airplane is an example of this. It is highly likely that the bank is going to refuse claims of this nature, but should they? Again no! As I stated above this really is a breach of contract matter and in breach of contract you can claim damages for matters such as this.

Finally, customers of the bank need to consider their credit rating, missed payments can therefore have an effect on this. I would advise that you write to the organisation that you have failed to pay as a result of this glitch and ask them either not to report the missed payment to credit agencies or to withdraw their report, on the basis that the missed payment was out of your control.

If you have been affected by this glitch we would love to hear from you at www.youandyourrights.com  on our forum.