Regulators to investigate TSB’s IT meltdown

by Mike Birkett, 07/06/2018

Regulators to investigate TSB’s IT meltdown

Britain’s financial regulators are to investigate the massive IT failure which led to 1.9 million TSB customers losing access to their online banking services.
The Financial Conduct Authority (FCA) has already criticised the bank’s top management for suggesting most TSB customers could carry out transactions as normal, saying it gave an ‘optimistic’ view of the breakdown which was ‘too positive.’

Failure

FCA chief executive Andrew Bailey emphasised how seriously the regulator is taking the failure of service and its concern that it may have affected customers’ trust in banking.
Revealing that both the FCA and the Prudential Regulation Authority (PRA) are to investigate the circumstances he said: “We do not normally make this information public, but, given the level of public interest, I want to be clear that we will be conducting this work.”

Unaffected

TSB boss Paul Pester had previously told members of the Treasury Select Committee in the middle of the crisis that the majority of the bank’s customers were unaffected and could continue their business as normal.
The bank had also told its customers that the ‘vast majority’ of them could still use their online services when only half were able to do so.

Greater caution

In a letter to the committee Mr Bailey commented ‘greater caution would have made sense’ and that Mr Pester should have shared more details of the meltdown with committee members, including the initial findings of a team of IBM computer specialists called in to resolve the issue.
He said: “The FCA has been dissatisfied with TSB’s communications with its customers and we have had concerns that TSB was not being open and transparent about the issues experienced.”

Criticisms

Treasury Select Committee chair Nicky Morgan commented: “The regulator does not make such criticisms lightly.
“I am deeply concerned by TSB’s poor communications about the scale and nature of the problems it has faced, by its response to customer fraud and by the quality and accuracy of the oral and written evidence provided by Dr Pester to the committee.
“The committee will discuss Mr Bailey’s letter, and the ongoing problems faced by TSB customers, when it sees Dr Pester and other TSB board members, as well as the FCA, on Wednesday.”

Trouble

Some TSB customers are still having trouble accessing their online accounts six weeks after the crisis hit.
The problems began as the bank started to migrate five million customer accounts from its previous owner, Lloyds, to its new owner, Banco Sabadell. Within hours customers were complaining they couldn’t access their accounts to make payments or even see their balances.
As the crisis continued, customers reported being able to see confidential information from other people’s accounts and to report their accounts had been drained by hackers taking advantage of the situation.

Focus

A TSB spokesperson said: “We will be updating the Treasury Select Committee and will continue to fully support its inquiry.
“In the meantime, we continue to focus on doing whatever it takes to put things right for our customers and ensuring that no customer will be left out of pocket as a result of the recent IT issues.”

“The bank had also told its customers that the ‘vast majority’ of them could still use their online services when only half were able to do so.”

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