Finance watchdog investigates British bank TSB over IT failures
07 Jun 2018

Politicians criticised TSB boss Paul Pester’s handling of the British bank’s ongoing IT problems on Wednesday and the Financial Conduct Authority (FCA) said it was investigating the bank’s response.

TSB, owned since 2015 by Spanish bank Sabadell (SABE.MC), saw thousands of users locked out of their accounts last month and a surge in accounts hit by fraud after a botched migration of its computer systems.

There has been 2,200 fraud attempts and around 1,300 customers have lost money, Pester told the influential cross-party Treasury Select Committee on Wednesday.

“This was an unprecedented attack across UK banking by organised crime,” Pester said, after apologising for the problems.

The regulator and lawmakers heaped pressure on Pester over his reaction to the crisis, raising questions about whether he may have to resign.

The FCA has the power to fine or ban executives that breach its rules.

TSB Chairman Richard Meddings said the bank will publish its own review into what happened, being conducted by law firm Slaughter & May.

“Where there is culpability we will act on it,” he said.

POOR COMMUNICATION

Since the systems outage, TSB has made overly optimistic claims about how many customers were affected and has done a poor job of communicating with customers, the FCA’s Chief Executive Andrew Bailey told the Committee.

Nicky Morgan, chair of the Committee, said: “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.”

Pester, a former management consultant with a degree in theoretical physics from Oxford University, previously worked at Lloyds Banking Group (LLOY.L) on a project to separate TSB from its previous owner Lloyds in 2014.

Pester was criticised by members of the Treasury Committee when he first appeared before them on May 2.

– By Lawrence White, Emma Rumney; additional reporting by Huw Jones, Reuters, 6 June 2018

Link to Reuters.

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