An IT meltdown which locked Royal Bank of Scotland customers out of their accounts last summer is being investigated by the City regulator – potentially triggering a big fine for the part-nationalised bank.

The Financial Conduct Authority (FCA) has started an enforcement investigation into the fiasco in June and July, which saw payments go awry, wages appear to go missing and home purchases and holidays interrupted.

The glitch affected up to 17 million customers of RBS, NatWest and Ulster Bank. Public confirmation of a probe prior to its completion is unprecedented for the regulator, which took over from the Financial Services Authority at the start of the month.

The 81% state-owned bank could face a fine, censure or both.

RBS has already taken a £175 million hit to cover costs and compensation relating to the calamity, while the incident prompted chief executive Stephen Hester not to take his 2012 bonus.

RBS did not give details on what went wrong, but it reportedly followed an attempt to install a software update on a payment processing system, which was then corrupted.

It meant account balances were not updated properly overnight and credit and debit balances failed to show up as quickly as they should.