TSB loses 12,500 customers after IT crisis

TSB loses 12,500 customers after IT crisis

TSB chief executive Paul Pester told MPs yesterday that his bank had lost around 12,500 customers since suffering an IT meltdown six weeks ago.
He also confirmed that there have been at least 10,600 fraud alerts and 1,300 cases where customers lost money. Overall, the bank received 93,700 complaints from angry customers.

Intense questioning

Mr Pester was appearing before the Treasury Select Committee for the second time to face intense questioning on the bank’s handling of the massive IT failure in April which affected 1.9 million of TSB’s 4 million customers.
Together with TSB chairman Richard Meddings and chief operations officer Miguel Montes, he apologised several times for the bank’s failings and the distress caused to customers.

Crisis

The crisis began as TSB tried to migrate details of five million accounts from computers run by its previous owner, Lloyds, to the system run by its new owner, Sabadell.
Said Mr Pester: “I am deeply sorry to say that the issues we created as a consequence of migration were an opportunity for criminals to target TSB customers.”

Overwhelmed

He admitted TSB had been ‘overwhelmed’ when they were hit by 70 times the level of expected fraud attacks. The ‘normal’ level for operations of this type is four.
The bank’s system generated 10,600 fraud alerts of which 2,200 were later discovered to be actual fraud attempts.

Cost

Mr Meddings said the crisis has already cost the bank £70 million with compensation of £20 million so far paid to 25% of customers who have complained. Cancelled overdraft fees and other charges account for another £29 million and the bank has had to shell out £20 million to hire 2,200 extra staff, pay double overtime and hire advisers from IBM and Deloitte.
Mr Pester said: “Money is not an object in resolving this situation. We are not limiting any sort of budget or allocation, we will pay what is required.”

Software malfunction

On top of the fraud activity, a software malfunction resulted in regular payments made by 370 people who wanted to leave the bank being cancelled because TSB told utility companies that the customers had died.
Mr Pester apologised ‘unreservedly’ for the distress caused after committee chairman Nicky Morgan asked if TSB deserved its new nickname of ‘Truly Shambolic Bank.’

Internal investigation

Asked by committee member John Mann if ‘heads would roll’, Mr Meddings said TSB has ordered an internal investigation to be carried out by the law firm of Slaughter and May and that they would wait for the result of that before taking any action.
“Where there is culpability we will act on it,” he added.

FCA/PRA investigation

Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), has already announced that both his organisation and the Prudential Regulation Authority (PRA) will also be investigating the debacle.
He told the committee the FCA was ‘unsatisfied’ with the level of communication from the bank, adding: “A more straightforward recognition of what the situation was would have been helpful. They are in a hole and they have got to get themselves out of this hole.”

“The bank’s system generated 10,600 fraud alerts of which 2,200 were later discovered to be actual fraud attempts. “

Rebuilding trust in RBS could take 10 years

Royal Bank Of Scotland (RBS) chief executive Ross McEwan has admitted it could take up to 10 years for the bank to restore trust in its reputation after it came joint bottom in a customer satisfaction survey.

Rebuilding trust in RBS could take 10 years

Royal Bank Of Scotland (RBS) chief executive Ross McEwan has admitted it could take up to 10 years for the bank to restore trust in its reputation after it came joint bottom in a customer satisfaction survey.

HSBC pays $765 settlement for US toxic mortgages

HSBC has become the latest bank to pay a multi-million dollar settlement to American regulators to conclude its involvement in the mis-selling of toxic mortgage investments in the lead up to the financial crisis of 2008.

HSBC pays $765 settlement for US toxic mortgages

HSBC has become the latest bank to pay a multi-million dollar settlement to American regulators to conclude its involvement in the mis-selling of toxic mortgage investments in the lead up to the financial crisis of 2008.

Who tops the £32.2 billion PPI leaderboard?

The figures surrounding what is probably the biggest ever financial scandal ever to hit the UK are truly mind-boggling.

News by month:

News by Category: