TSB fined £48m over IT migration meltdown – business live

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TSB apologises again over IT meltdown

TSB has confirmed it has reached agreement with the FCA and the PRS over its 2018 Migration Programme, and apologised to customers who were caught up in the mess.

TSB’s chief executive officer, Robin Bulloch, says the bank has made changes since:

“We’d like to apologise again to TSB customers who were impacted by issues following the technology migration in 2018. We worked hard to put things right for customers then and have since transformed our business.

“Over the past four years, we have harnessed our technology to deliver new products and better services for TSB customers.”

Introduction: TSB fined over IT migration meltdown

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

TSB bank has been fined £48.65m over a notorious botched IT migration which left customers locked out of their bank accounts for days back in 2018.

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have fined TSB Bank £48,650,000 for “operational risk management and governance failures”, including management of outsourcing risks, relating to the bank’s IT upgrade programme.

The programme involved a migration to a new IT platform in April 2018, from a system operated by its former owner, Lloyds Banking Group, to one designed by its current owner, the Spanish bank Sabadell.

It immediatedly left customers facing technical failures and ‘significant disruption’ to TSB’s branch, telephone, online and mobile banking services. A week into the crisis, half of TSB’s customers were unable to access its internet banking services, in one of the worst banking meltdowns in many years.

Today, the regulators say that TSB “failed to organise and control the IT migration programme adequately”, or to properly manage the operational risks from outsourcing work to a critical third-party supplier.

The incident shows the critical importance that firms invest in resilience to avoid the widespread harm that operational disruption can cause, the FCA and PRA say say.

Mark Steward, executive director of Enforcement and Market Oversight at the FCA, says:

‘The failings in this case were widespread and serious which had a real impact on the day-to-day lives of a significant proportion of TSB’s customers, including those who were vulnerable.

‘The firm failed to plan for the IT migration properly, the governance of the project was insufficiently robust and the firm failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.’

As we liveblogged at the time, some TSB customers vowed to close their accounts, while others reported spending hours on the phone trying, and failing, to get through to customer support.

There was also a surge in fraud attempts, while then CEO Paul Pester forfeited a £2m bonus (and endured a bruising session in front of MPs on the Treasury committee).

TSB has been fined £29,750,000 by the FCA and £18,900,000 by the PRA – which includes a 30% discount for having agreed to resolve this matter (otherwise it would have been fined £69,500,000).

Together with the PRA we have fined TSB Bank a total of £48.65m for operational risk management and governance failures. Technical failures in the bank’s IT system ultimately resulted in customers being unable to access banking services. https://t.co/zSPaNyHvIy

— Financial Conduct Authority (@TheFCA) December 20, 2022

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