TSB comes under investigation following IT meltdown

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TSB comes under investigation following IT meltdown

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By Mark Fairlie

TSB Bank has come under investigation by the Financial Conduct Authority (FCA) following a computer failure that caused as many as 1.9 million customers to lose access to their online banking services.

Concerns were raised after the bank introduced a new IT system back in April following their split from Lloyds Banking Group. After transferring all of their customer data over to an updated platform, they found it was unable to cope with the volume of customers once it was live.

Whilst TSB previously warned customers that “some services, like online banking, making payments or transferring money” might not be possible during the weekend of the systems upgrade, the Financial Times reported that even “six weeks later, some retail and business customers are still having problems making payments.”

40% of customers unable to get through to their bank

TSB customers flooded social media with complaints regarding their accounts following the IT system’s upgrade. The majority of these claimed they had received error messages when attempting to login to their online banking accounts, were denied access entirely, or were shown the account details of other customers.

Many customers also reported having faced serious financial difficulties as a result of the computer meltdown.

One customer, Lorna Connolly, told the BBC how she was forced to “ring to grovel” with suppliers for her wedding as system failures meaning she was unable to pay them on time. TSB reportedly called her the day before her wedding to offer compensation of £100.

Another TSB customer watched as thousands of pounds were stolen from his wedding savings account whilst on hold with the bank’s fraud department. TSB has admitted that as many as 1,300 customers had money stolen from their account by fraudsters exploiting the glitched system.

The FCA launched their investigation into the bank shortly after.

FCA “dissatisfied with TSB’s communications”

TSB boss Paul Pester has come under fire from MPs for failing to grasp the seriousness of the IT meltdown and has received further criticism from the FCA for giving a too “optimistic view” in the wake of the situation. He is due to face the Treasury Select Committee for a second time following the incident later this month.

TSB comes under investigation following IT meltdown

MP and chair of the Treasury Committee Nicky Morgan said she was

“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”.

FCA chief executive Andrew Bailey wrote that the FCA was also “dissatisfied” with TSB’s communications with customers and that they were concerned the bank “was not being open and transparent about the issues experienced.”

As the investigation continues, Bailey added that whilst the regulator does not normally make the information of their cases public, “given the level of public interest, I want to be clear that we will be conducting this work.”

“No TSB customer will be left out of pocket”

The bank has released a statement promising that “no TSB customer will be left out of pocket” as a result of the failure of their system. They are waiving current account overdraft fees and interest charges for March, April and May, and are also increasing interest rates on its Classic Plus account from 3% to 5%.

Some have argued that whilst this is a good start, it is still unlikely to tackle the sheer number of losses customers have suffered. With many now facing late fees on credit card bills and loan repayments since losing access to their accounts, Clea Bourne, a lecturer at Goldsmiths, says the whole financial sector should show some understanding regarding default fees.

Paul Pester told BBC Radio 5 Live that “we are on our knees”, but that the bank would “get up and come back fighting”.

By | 2018-06-07T11:31:29+00:00 June 7th, 2018|Banking, Personal Finance|0 Comments

About the Author:

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Journalist, Mark Farlie, provides cutting edge articles with a focus on plain English & zero jargon. With a breadth of interests, Mark writes on topics such as; personal finance, commercial finance, B2B, marketing, law and technology.

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