TSB Bank facing heavy criticism after investigation into IT meltdown
TSB Bank is set to be criticised for failing to prepare for a systems migration in a report on the malfunction that left 2m customers unable to access their current accounts.
City law firm Slaughter and May has submitted its final report on the incident to the bank and regulators, according to Sky News, with an expectation it will be published later in the month.
As a result of the IT meltdown a number of current and former TSB managers have had outstanding deferred share awards dating back to 2015 cancelled, Sky News report.
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Executives could consider taking legal action against the bank, although it’s not yet clear if any formal claim will occur.
The cost of the long-awaited, 300-page report was £25m, with TSB board members expected to take the brunt of criticism.
TSB owner Spanish financial services group Banco Sabadell is keen for it to be published before new chief executive Debbie Crosbie gives a strategy update on 25 November, and while the political agenda is focused on the upcoming general election, sources told Sky.
However, the Financial Conduct Authority and Prudential Regulation Authority are set to carry out a joint investigation in the wake of the report.
Almost 2m customers were unable to make payments for days or weeks in April 2018 when the bank tried to migrate customer data from Lloyds’ systems to a new one designed by Sabadell, which acquired the bank from Lloyds Banking Group in 2015.
TSB reported a pre-tax loss of more than £105m last year.
The report is expected to conclude that the TSB board were too optimistic about the migration being successful given the complexity of the project and failed to ask the right questions about the process, sources told Sky News.
The fallout from the issues have already cost the bank more than £350m in “post-migration charges” according to the company’s accounts.
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This includes the cost of Slaughter and May’s investigation and a large proportion of compensation for customers.
A spokesman for TSB and Sabadell told Sky News: “We have now received the review into TSB’s 2018 migration carried out by the law firm, Slaughter and May.
“The TSB board is reviewing it, sharing it with UK regulators and will provide a further update in due course.”