TSB fined £48m for major IT failures

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) fined the bank a total of £48.65m for “operational risk management and governance failures” including outsourcing relating to the bank’s IT upgrade programme.

In April 2018, TSB updated its IT systems and migrated customer services on to a new platform. While the data itself migrated successfully, the platform immediately experienced technical failures resulting in significant disruption to the continuity of TSB’s banking services, including branch, telephone, online and mobile banking.

All of TSB’s branches and a significant proportion of its 5.2 million customers were affected by the initial issues.

Some customers continued to be affected by some issues and it took until December 2018 for TSB to return to business-as-usual. TSB has paid £32.7m in redress to customers who suffered detriment.

The regulators’ found that TSB failed to organise and control the IT migration programme adequately, and it failed to manage the operational risks arising from its IT outsourcing arrangements with its critical third-party supplier.

Mark Steward, FCA executive director of enforcement and market oversight, said: “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.”

Sam Woods, CEO of the PRA, said: “The PRA expects firms to manage their operational resilience as well as their financial resilience. The disruption to continuity of service experienced by TSB during its IT migration fell below the standard we expect banks to meet.”

TSB was fined £29.75m by the FCA and £18.9m by the PRA. TSB agreed to resolve this matter with the FCA and PRA, qualifying it for a 30 per cent discount in the overall penalty imposed by both regulators.

Without this discount, the FCA and PRA would have imposed a combined financial penalty of £69.5m (£42.5m by the FCA and £27m by the PRA).

TSB chief executive Robin Bulloch said: “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.”