Introduction: TSB fined over IT migration meltdownGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
TSB bank has been fined £48.65m over a notorious botched IT migration which left customers locked out of their bank accounts for days back in 2018.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have fined TSB Bank £48,650,000 for “operational risk management and governance failures”, including management of outsourcing risks, relating to the bank’s IT upgrade programme.
The programme involved a migration to a new IT platform in April 2018, from a system operated by its former owner, Lloyds Banking Group, to one designed by its current owner, the Spanish bank Sabadell.
It immediatedly left customers facing technical failures and ‘significant disruption’ to TSB’s branch, telephone, online and mobile banking services. A week into the crisis, half of TSB’s customers were unable to access its internet banking services, in one of the worst banking meltdowns in many years.
Today, the regulators say that TSB “failed to organise and control the IT migration programme adequately”, or to properly manage the operational risks from outsourcing work to a critical third-party supplier.
The incident shows the critical importance that firms invest in resilience to avoid the widespread harm that operational disruption can cause, the FCA and PRA say say.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA, says:
‘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.’
As we liveblogged at the time, some TSB customers vowed to close their accounts, while others reported spending hours on the phone trying, and failing, to get through to customer support.
There was also a surge in fraud attempts, while then CEO Paul Pester forfeited a £2m bonus (and endured a bruising session in front of MPs on the Treasury committee). Pester resigned in September 2018.
TSB has been fined £29,750,000 by the FCA and £18,900,000 by the PRA – which includes a 30% discount for having agreed to resolve this matter (otherwise it would have been fined £69,500,000).
Together with the PRA we have fined TSB Bank a total of £48.65m for operational risk management and governance failures. Technical failures in the bank’s IT system ultimately resulted in customers being unable to access banking services. t.co/zSPaNyHvIy
— Financial Conduct Authority (@TheFCA) December 20, 2022 The agenda 7am GMT: German PPI index of producer prices
7am GMT: China’s FDI (foreign direct investment) data for November
1.30pm GMT: US building permits and housing starts for November
Ryanair agrees pilot pay deal Photograph: Brian Lawless/PATravel news: Ryanair has agreed a four-year pay deal with its Irish pilots which will include the immediate restoration of pay cuts from during the Covid-19 pandemic.
The Ireland-based airliner had spent months in discussions with the Forsa union over a long-term pay deal.
Ryanair’s pilots in Ireland will now receive three years of pay increases over the next four years until March 2027 through the deal, the low-cost carrier told investors on Tuesday.
Ryanair’s people director Darrell Hughes said:
“We welcome this pay restoration agreement with Forsa and our Irish pilots which will see pay cuts previously agreed during Covid restored in the Dec payroll in time for Christmas.
This agreement which includes annual pay increases for the next four years now brings our Irish pilots into line with similar pay restoration deals concluded with our other pilot unions across Europe over the past nine months.
We are grateful for the assistance of the WRC in reaching this sensible agreement with Forsa and our Irish Pilots.”
Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, says that the disruption suffered by TSB customers in 2018 is not acceptable:
‘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
As well as today’s fines, TSB has paid £32.7m in redress to customers who suffered from the bothed IT migration of 2018.
The FCA and PRA say:
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 apologises again over IT meltdownTSB has confirmed it has reached agreement with the FCA and the PRS over its 2018 Migration Programme, and apologised to customers who were caught up in the mess.
TSB’s chief executive officer, Robin Bulloch, says the bank has made changes since:
“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.”
Introduction: TSB fined over IT migration meltdownGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
TSB bank has been fined £48.65m over a notorious botched IT migration which left customers locked out of their bank accounts for days back in 2018.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have fined TSB Bank £48,650,000 for “operational risk management and governance failures”, including management of outsourcing risks, relating to the bank’s IT upgrade programme.
The programme involved a migration to a new IT platform in April 2018, from a system operated by its former owner, Lloyds Banking Group, to one designed by its current owner, the Spanish bank Sabadell.
It immediatedly left customers facing technical failures and ‘significant disruption’ to TSB’s branch, telephone, online and mobile banking services. A week into the crisis, half of TSB’s customers were unable to access its internet banking services, in one of the worst banking meltdowns in many years.
Today, the regulators say that TSB “failed to organise and control the IT migration programme adequately”, or to properly manage the operational risks from outsourcing work to a critical third-party supplier.
The incident shows the critical importance that firms invest in resilience to avoid the widespread harm that operational disruption can cause, the FCA and PRA say say.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA, says:
‘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.’
As we liveblogged at the time, some TSB customers vowed to close their accounts, while others reported spending hours on the phone trying, and failing, to get through to customer support.
There was also a surge in fraud attempts, while then CEO Paul Pester forfeited a £2m bonus (and endured a bruising session in front of MPs on the Treasury committee). Pester resigned in September 2018.
TSB has been fined £29,750,000 by the FCA and £18,900,000 by the PRA – which includes a 30% discount for having agreed to resolve this matter (otherwise it would have been fined £69,500,000).
Together with the PRA we have fined TSB Bank a total of £48.65m for operational risk management and governance failures. Technical failures in the bank’s IT system ultimately resulted in customers being unable to access banking services. t.co/zSPaNyHvIy
— Financial Conduct Authority (@TheFCA) December 20, 2022 The agenda 7am GMT: German PPI index of producer prices
7am GMT: China’s FDI (foreign direct investment) data for November
1.30pm GMT: US building permits and housing starts for November