Financial regulator to investigate TSB over IT meltdown

The Financial Conduct Authority (FCA) has confirmed it is investigating TSB's IT migration. Picture: PA Wire
The Financial Conduct Authority (FCA) has confirmed it is investigating TSB's IT migration. Picture: PA Wire
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The city watchdog has confirmed it is investigating TSB’s troubled IT migration as the head of a committee of MPs warned she is “deeply concerned” about how problems were communicated.

The head of the Financial Conduct Authority (FCA) said in a letter to Treasury Committee chairwoman Nicky Morgan that the regulator would carry out a joint investigation with the Prudential Regulation Authority.

Andrew Bailey, chief executive of the FCA, noted: “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.”

Mrs Morgan released correspondence with the watchdog in which Mr Bailey said TSB chief executive Paul Pester’s evidence to the committee in May was “an optimistic view” and “greater caution would have made sense”.

Mr Bailey said Dr Pester could have shared “more detail with the committee”, including the initial views of a team of experts from IBM who were drafted in to help solve the crisis.

Up to 1.9 million people using TSB’s digital and mobile banking found themselves locked out of their bank accounts following the migration of data on customers from former owner Lloyds’ IT system to a new one managed by current owner Sabadell.

Last month, Dr Pester told MPs on the Treasury Committee that he took “absolute responsibility” for the problems, but said the migration of billions of customer records was successful “to the penny” and the underlying engine of the bank was “working well”.

He is due to appear in front of the committee again on Wednesday.

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In his May 30 letter responding to Mrs Morgan’s request for information, Mr Bailey wrote: “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,” adding that the bank’s response “could reduce trust in TSB and in the banking sector as a whole”.

He also said TSB had not met regulations to refund all relevant customers as soon as practicable or by the end of the business day after the day which it became aware of the fraud.

Mrs Morgan said: “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.”

Mr Bailey’s letter also revealed that at the time of writing, more than 40 per cent of calls to TSB were still abandoned or disconnected before progressing through the IVR (interactive voice recognition system) and wait times to speak to an agent had at times been longer than 30 minutes.