RBS knew about IT system problem two years before glitch RBS has paid customers hit by a computer meltdown average of Â£5 each They were warned about the danger of the system failing two years ago An IT glitch locked millions of people out of their accounts thenÂ Details emerged yesterday as RBS was hit with a Â£56million fineÂ By James Salmon for the Daily Mail Royal Bank of Scotlandâ€™s bosses were warned about the danger of a computer meltdown two years before an IT glitch caused chaos for millions of its customers. But it has paid customer less than Â£5 compensation on average, with 2.7million receiving less than Â£1. The explosive details emerged yesterday as the state backed lender was hit with a record Â£56million fine for a botched software upgrade in June 2012 which locked millions of its customers out of their bank accounts. Royal Bank of Scotland was hit with a record Â£56m fine for a botched software upgrade in June 2012 Underlining the seriousness of the failings, the fine marks the first joint penalty between City watchdog the Financial Conduct Authority and the Bank of Englandâ€™s Prudential Regulation Authority, established to prevent another financial crisis. Issuing its first penalty - of Â£14million - the PRA said the RBSâ€™s â€˜IT incidentâ€™ could have had â€˜adverse effects on the stability of the financial systemâ€™ by disrupting the clearing system, which is used to settle payments among banks. Tracey McDermott, the FCAâ€™s director of enforcement and financial crime, said: â€˜Modern banking depends on effective, reliable and resilient IT systems. The bankâ€™â€™s failures meant millions of customers were unable to carry out the banking transactions which keep businesses and peopleâ€™s everyday lives moving.â€™ Business Secretary Vince Cable said: â€˜This is another disastrous fine for RBS after a series of failures. RBSâ€™s priorities under Fred Goodwin meant that it neglected its IT systems, which in some cases are now decades out of date.â€™Â The issues in June 2012 stemmed from a botched upgrade to the software that processed updates to customersâ€™ accounts overnight. The disruption lasted for more than a week for RBS and NatWest customers, and more than three weeks for Ulster Bank, RBSâ€™s Irish subsidiary. Business Secretary Vince Cable said: â€˜This is another disastrous fine for RBS after a series of failures RBS admitted to â€˜unacceptable weaknessesâ€™ in its computer systems as around 6.5million customers â€" equivalent to 10pc of the UK population â€" could not pay bills or receive money and wages into their bank accounts. It revealed that it has paid a total of just over Â£70million in compensation to customers who were hit with overdraft charges or incurred other expenses because of the meltdown. But the lender, which promised to ensure no customers are left out of pocket, admitted this equates to an average of just Â£4.83 for the 4.7million retail customers of RBS and NatWest customers affected. Some 2.7m customer received less than Â£1 due to lost interest on current accounts and savings. The bank could not provide a breakdown of compensation for Ulster Bank and business customers. Last night one MP branded the compensation â€˜derisoryâ€™. John Mann, Labour member of the Treasury Select Committee said: â€˜This compensation is equivalent to not much more than a pint of beer. Yet again customers are not being looked after while people at the top get excessive pay and bonuses.â€™ Yesterday regulators revealed that the dangers of the â€˜batch schedulerâ€™ software failing were flagged up to management on August 1 2010, just under two years before the systems meltdown. RBS chairman Sir Philip Hampton said: 'I want to apologise to all customers in the UK and Ireland that we let down two and a half years ago' For this reason it fined RBS for â€˜breachesâ€™ covering the period from August 1 2010, to July 2012, when the problem was finally fixed. RBSâ€™s new chief administration officer Simon McNamara, brought in last year to clean up the mess, yesterday insisted the specific problem was â€˜not explicitly called outâ€™ to RBS bosses by internal auditors. He said the bank had committed to spend Â£750million by 2015 on making its IT systems more secure and added that the â€˜door is openâ€™ to customers who believe they are still out of pocket as a result of the failings. Former chief executive Stephen Hester waived his Â£963,000 bonus over the IT debacle. The latest fine comes as he already faces pressure to hand back a Â£1million long term shares bonus he received earlier this year, despite being ousted from his position last summer. Last week RBS was fined Â£400million by UK and US regulators for rigging the Â£3 trillion a day foreign exchange market under Mr Hesterâ€™s watch. RBS chairman Sir Philip Hampton said: â€˜Our IT failure in the summer of 2012 revealed unacceptable weaknesses in our systems and caused significant stress for many of our customers. As I did back then, I want to apologise to all customers in the UK and Ireland that we let down two and a half years ago.â€™ RBS and NatWest have 26million UK customers, 4,000 ATMs and 2,120 bank branches.