TSB computer meltdown cost £176 million

TSB computer meltdown cost £176 million

TSB’s computer meltdown earlier this year cost the bank £176 million and pushed it to a half year loss of £107.4 million.
The loss was sufficiently large to force its new Spanish owners, Banco Sabadell, to a reported three month loss of £123 million in June.

Major disruption

In April the bank suffered major disruption when around two million of its customers lost access to their online banking services.
The lender says only 37% of the 130,000 complaints it received have been resolved and some of the IT problems remain ongoing.

Catastrophic

The catastrophic breakdown in the bank’s IT function happened when they tried to migrate customers from the computers of its former owners, Lloyds, to its new Spanish owners, Sabadell.
The £176 million cost of the debacle breaks down into £115.8 million for customer compensation, £30.7 on the additional resources needed to deal with the problem and £29.9 million in foregone income of waived overdraft fees and interest charges.

Frustrated

Chief executive Paul Pester said: “I know how frustrated many customers have been by what’s happened.
“It was not acceptable and was not the level of service that we pride ourselves on – nor was it what our customers have come to expect from TSB.”

Statement

In a statement the bank said it took on 1,800 new employees to deal with the problem and re-assigned the roles of 700 staff, including 260 experienced workers who formed a special complaints team.
Approximately 26,000 customers switched their accounts away from TSB in the aftermath, but the bank says more than 20,000 people either opened a new account with them or switched from another lender in the second quarter of the year.

Formal investigation

In June Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), announced there would be a joint formal investigation into what happened with the Prudential Regulation Authority (PRA).
In a 10 page letter to the Treasury Select Committee 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.”

Progress

Paul Pester said: “We’re making progress in resolving the service problems customers experienced following our IT migration and our priority in the second half of the year continues to be putting things right for our customers.
“Looking further ahead we are determined to get back to bringing more competition to UK banking and ultimately making banking better for consumers and small businesses.”

“It was not acceptable and was not the level of service that we pride ourselves on – nor was it what our customers have come to expect from TSB”

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