More than 530 people were overcharged by Havering Council due to a misplaced decimal place not noticed by staff.
The mistake occurred on July 23 this year when a software update to the council’s accounting system caused a “decimalisation issue”.
By the time the direct debits were processed ten days later, three members of staff had failed to spot the error.
The incident was made public during an audit committee meeting on October 28, with Councillor Roger Ramsey describing it as a “quite a serious situation from a reputational point of view”.
Jeremy Welburn, head of assurance, told the committee: “It’s a significant point to note that there were issues, human error if you like, but it was within two distinct areas, ICT and transactional services.
“The control environment was there, it just wasn’t applied appropriately in this case.”
A summary of the incident in a report given to councillors reads: “Whilst the internal audit review undertaken does not seek to apportion blame to individual officers, it is clear that due care and attention has not been paid at key stages in this process.”
Havering Council has not responded to repeated requests for how much money was withdrawn from people’s accounts.
A spokesperson for the council said: “We apologise unreservedly for this. As soon as we became aware of the issue we made contact with banks so they can support customers and are contacting each affected resident.
“We understand as a result of the error a large number of those direct debits will be rejected by banks with residents suffering no loss.
“For those payments which do go through, we will be making emergency rapid payments to cover the full amount and will cover any bank charges incurred as a result of the error.
“An emergency phone line, 0203 973 1259 will be open between 0900 and 5:00pm to support residents.”