TSB fined £50mn over IT outage

UK regulators have fined TSB £48.7mn for failures in risk management and governance after an IT outage that left 2mn customers locked out of their accounts.

The Financial Conduct Authority and the Prudential Regulation Authority announced the fine on Tuesday over TSB’s management of outsourcing risks relating to an IT revamp in 2018.

TSB, which was bought by Banco Sabadell in 2015, was attempting to move 5.2mn customers to the Spanish lender’s systems, with the help of Sabadell’s technology subsidiary, Sabis.

However, the transfer ran into problems in April 2018, leaving many customers unable to access their online accounts.

The bungled migration cost Paul Pester his role as chief executive and TSB had to spend more than £350mn to resolve the problems and pay compensation to customers.

The regulators said on Tuesday that a “significant” proportion of the bank’s 5.2mn customers were affected and that “it took until December 2018 for TSB to return to business as usual”.

They added that TSB failed to organise and control the IT migration programme adequately and manage the operational risks arising from its outsourcing arrangements with Sabis.

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.”

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.”

The failed migration led to a debate over which party was responsible, with questions raised over Sabadell and TSB’s role in the problems.

Law firm Slaughter and May conducted an independent review, published in 2019, which found TSB repeatedly missed opportunities to avoid the meltdown.

The review also found that Sabis was not ready to operate the platform, but said this problem was not identified because it was a part of Sabadell and not treated like a normal third-party supplier.

TSB was listed in London until it was sold to Sabadell for £1.7bn in 2015.

Lloyds Banking Group previously owned TSB but listed the bank as a condition of receiving a government bailout during the 2008 financial crisis.

Lloyds retained a stake in TSB and it continued to use Lloyds’ IT systems. Following the sale to Sabadell, Lloyds provided £450mn to cover the cost of the migration.