TSB is fined £50m over IT meltdown that left millions locked out of their accounts

TSB has been fined nearly £50 million over an IT meltdown that left millions of customers unable to access their accounts and struggling to access basic banking services.

The lender was fined £29.8 million by the Financial Conduct Authority (FCA) and sanctioned £18.9 million by the Bank of England’s Prudential Regulation Authority (PRA) – a total of £48.7 million.

That was on top of the £32.7 million it has already paid in damages to customers affected by the disaster in 2018, with the company dubbed the Totally Shambolic Bank by this newspaper.

Regulators found a ‘significant portion’ of TSB’s 5.2 million customers were affected when the bank – which was bought by Spain’s Sabadell in 2015 – attempted to move its online systems from former owner Lloyds Banking Group’s platform to a new service.

When the migration took place in April 2018, customers found payments failed, they couldn’t log into their online accounts, phone lines were flooded with calls, and identification systems crashed in branches.

About 40 customers were even able to see details of other people’s finances—mostly family members—when they logged into their online bank accounts.

A couple feared they would have to cancel their wedding as they were unable to pay more than £2,000 in bills just days before the ceremony.

The FCA and PRA acknowledged that the migration of TSB’s IT systems was “ambitious and complex.”

But TSB failed to ‘organise and control’ the program and ‘failed to manage the operational risks arising from the outsourcing arrangements’.

Mark Steward, the FCA’s Executive Director of Enforcement and Market Surveillance, said: ‘The deficiencies in this case were widespread and serious and had a real impact on the daily lives of a significant proportion of TSB’s customers, including those who were vulnerable.

“The company did not properly plan the IT migration, the governance of the project was insufficiently robust, and the company did not ensure that it manages its business responsibly and effectively, with adequate risk management systems in place.”

A spate of attacks by scammers in the wake of the scandal meant that 2,200 customers suffered fraudulent attempts to access their accounts.

Working Party on Consumer Rights Which? said the collapse caused “enormous distress and inconvenience to customers, many of whom lost access to their accounts altogether and were unable to pay bills or run a business.”

Jenny Ross, money editor at Which?, added: ‘It is encouraging that the regulator has taken strong action today and has sent a clear message that harmful IT failures will not be tolerated.’

The IT disaster rocked TSB. Just a few months later, CEO Paul Pester left the bank.

A report from law firm Slaughter & May found that TSB’s board of directors lacked “common sense” and that bosses made “ill-considered” assessments of the bank’s readiness to go live with the new systems.

TSB tried to put the debacle behind it when it appointed Debbie Crosbie as CEO in 2019. She has since joined Nationwide and has been replaced by Robin Bulloch.

But the lender struggles to rebuild his reputation. Four years later, the number of customers still fluctuates around 5.2 million.

And last year, plans for Sabadell to sell TSB to rival Santander fell through after the parties failed to agree on a price.

Bulloch said, “We would like to apologize again to TSB customers who were impacted by issues following the technology migration in 2018.

We then worked hard to put things right and have since transformed our business. For the past four years, we have leveraged our technology to deliver new products and better services for TSB customers.”