Since the self-inflicted PR disaster of April 2018, when a transfer of customer data to new systems went wrong, causing months of interruption for some customers, the bank claims to have revolutionized its operations.
Regulators have penalized TSB £48.65m for “operational resilience shortcomings” relating to its huge IT meltdown in 2018, which prevented millions of customers from accessing their accounts for several weeks.
In April of that year, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) of the Bank of England detected “widespread” problems in the planning and execution of a customer data move.
TSB, which was spun out from Lloyds Banking Group, went public in 2014 and was acquired by Sabadell the following year, and was attempting to transfer data from Lloyds’ systems to a new one established by its Spanish owner.
After the switch to the new platform, however, severe disruptions to the continuity of financial services, including branch, telephone, online, and mobile banking, occurred.
The FCA stated in a statement that all TSB branches and a considerable fraction of the bank’s 5.2 million clients were affected by the initial problems.
“It took until December 2018 for TSB to resume normal operations, while some customers remained to be affected by certain issues. TSB has compensated affected customers with £32.7 million.”
The affair was a PR disaster for the bank and led to the resignation of its former CEO, Paul Pester.
At the height of the crisis, he stated that the lender was “on its knees.”
The authorities stated: “The IT migration program at TSB was an ambitious and intricate IT change management initiative with significant operational risk.
“Its success was essential to the TSB’s capacity to maintain crucial functions and ensure safety and soundness.
“However, regulators determined that TSB failed to appropriately organize and control the IT migration effort, and failed to manage the operational risks emanating from its IT outsourcing contracts with its critical third-party provider.”
The FCA fined TSB £29.75 million and the PRA penalized it £18.9 million.
Mark Steward, executive director of enforcement and market monitoring at the FCA, stated, “The breaches in this instance were pervasive and serious, and had a meaningful impact on the day-to-day lives of a substantial number of TSB’s customers, especially the most vulnerable.”
The current CEO of TSB, Robin Bulloch, commented on the settlement: “We would like to extend our apologies to TSB customers who were negatively impacted by the technological move in 2018.
We worked diligently to make amends with customers at the time and have subsequently transformed our business.
During the past four years, we have utilized our technology to provide TSB clients with new products and improved services.
Sabadell stated in a statement that TSB will account for the settlement in the fourth quarter.
