Testing failures caused TSB IT meltdown | Gladstone Brookes

Testing failures caused TSB IT meltdown

Testing failures caused TSB IT meltdown

The IT meltdown which locked 1.9 million TSB customers out of their accounts last year could have been prevented if the system was properly tested.

A report into the systems crash, which prevented some customers from accessing their accounts for weeks, claims that the new process had not been properly tested by its builders before the decision was made to switch it over.

Tests

Law firm Smith & May said tests on the system were not carried out properly before TSB tried to switch data from its previous owner, Lloyds Banking Group (LBG), to its new owner, Sabadell.

Compatibility tests were only carried out off-line and no on-line testing was done before the big switchover.

The bank admitted that if the tests had been properly run it may have been able to spot the problems before customers were affected.

Sabis

The new system was built by Sabadell’s in-house IT division, Sabis, and it was they who decided to go live before full testing was carried out.

The report said: “We have concluded that the new platform was not ready to support TSB’s full customer base and Sabis was not ready to operate the new platform.”

Findings

Richard Meddings, executive chairman of TSB, said: “Slaughter and May’s report sets out a number of findings on aspects of the planning and preparation for migration which they believe could have been done differently.

“In light of the disruption customers experienced, TSB has made important changes to enable the bank to rebuild – including to leadership and management structures, as well as the decision to take direct control of its IT operations.

“Importantly, TSB has long since compensated every eligible customer who was impacted by the disruption.”

Meltdown

The meltdown cost TSB £330.2 million, plunging the bank £105.4 million into the red.

Of the £330.2 million, about £125 million was for customer compensation and sorting out their problems.

Resigned

The bank’s chief executive at the time, Paul Pester, resigned a few weeks after the incident, but has now commented on what happened.

He said: “If these findings are right, Sabis rolled the dice by running tests on only one of TSB’s two new data centres and this decision was kept from me and the rest of the TSB board.

“The report explains that this made it impossible for the TSB board to anticipate the serious problems experienced by many customers who could not access their accounts.

“Obviously, if we had been aware of Sabis’s shortcuts in the testing programme, the TSB board and I would never have pressed ahead with switching to the new system at that time.”

MPs demand action

The TSB meltdown is the most high profile of a number of IT problems experienced by Britain’s high street banks in recent years and MPs are now demanding action.

Condemning the glitches as ‘unacceptable’ the Treasury Select Committee has warned that more regulation might be needed to make sure the banks get it right.

They are especially worried about the use of ‘cloud services’ to store data.

Consequences

A committee spokesman said: “The consequences of a major operational incident at a large cloud service provider, such as Microsoft, Google or Amazon, could be significant.

“There is, therefore, a considerable case for the regulation of these cloud service providers to ensure high standards of operational resilience as they stand out as a source of systemic risk for the financial system.”

Inquiry

Steve Baker, lead member on the committee’s inquiry into IT problems, said: “The number of IT failures that have occurred in the financial services sector – including TSB, Visa and Barclays – and the harm caused to consumers, is unacceptable.

“The committee, therefore, launched this inquiry to look ‘under the bonnet’ at what’s causing the proliferation of such incidents, and what the regulators can do to prevent and mitigate their impacts.”

Not enough staff

The committee’s report suggested that Britain’s three main financial regulators – the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA) and the Bank Of England – don’t have enough staff and experience to deal with the increase in IT failures.

It further suggested a possible increase in the levy on the banking industry may be needed to ensure that the regulators are both adequately funded and resourced.

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