NatWest may have to pay customers compensation

Customers hit by a computer meltdown at NatWest and Royal Bank of Scotland could receive compensation for "distress and inconvenience", an industry watchdog said yesterday.

Property deals, holidays and birthday parties have been delayed or cancelled because people have been unable to withdraw cash following the freezing of hundreds of thousands of accounts on Tuesday night.

While the banks were expected to resolve most problems, there were bound to be arguments about who was to blame for situations, such as a house sale falling through, said a spokesman for the Financial Ombudsman Service (FOS). Customers should first complain to the banks but if they failed to respond fairly, the FOS could award compensation for "consequential losses" for the original fault and payment for any "distress and inconvenience,' a spokesman said.

As the problem entered its fifth day, 1,200 branches of NatWest, RBS and Ulster Bank opened for the first time on a Sunday. RBS Group said the underlying fault had been solved, but told customers: "We are still experiencing technical issues with our service which means account balances may not be displaying correctly."

In an attempt to sort out the mess, its main banks will stay open until 7pm tonight.

Stephen Hester, chief executive of NatWest owner RBS, apologised to customers on Saturday night. Mr Hester, who waived a £1m bonus this year, said: "I want to reassure customers that no one will be left permanently out of pocket as a result of this, and again, they should contact us directly about this."

Around 500 customers called the Financial Ombudsman Service on Saturday asking for help in the immediate aftermath of the problem caused by the bank's computer meltdown.