BELEAGUERED BANK TSB has admitted that 1,300 people had lost money as a result of the company's botched IT migration.
TSB CEO Paul Pester revealed the figure to MPs on the Commons Treasury select committee on Wednesday, adding that 12,500 people had left the bank since the failed system overhaul in April.
This platform migration saw accounts moved from the legacy system installed by TSB's previous owner Lloyds Banking Group to a new setup operated by current parent company Sabadell. Almost two million people - more than a third of TSB's 5.2 million customers - experienced problems when making mobile and online payments as the result of a software failure, and the problems have not been entirely resolved.
Moreover, fraudsters took advantage of the situation and stole money from 1,300 customers, with some losing their life savings, Pester confessed.
The IT problems have so far cost the bank £70m including £11.2m in compensation to customers who were affected by fraud.
Just prior to the Treasury committee hearing the bank had been roundly criticised by the Financial Conduct Authority (FCA) watchdog.
"The FCA has been dissatisfied with TSB's communications with its customers and we have had concerns that TSB was not being open and transparent about the issues experienced," Andrew Bailey, the FCA's chief executive, said in a letter to the Treasury committee.
"The current communications were perceived as poor, and could reduce trust in TSB and in the banking sector as a whole."
Bailey also said that TSB had failed to meet regulatory requirements of refunding all customers affected by the fraud "as soon as practicable and in any event by the end of the business day after the day which it became aware of the fraud".
"A more straightforward recognition of what the situation was would have been helpful," Bailey added.
Two weeks after the errors had become apparent, with online and mobile customers unable to log in or receiving error messages, Pester was still claiming that the migration had gone "smoothly" and blamed the organisation's IT meltdown on middleware "causing issues with the throughput of data".
MPS on the committee were scathing of the bank's over-optimistic attitude. Referring to the FCA's comments, chair Nicky Morgan said that TSB had "unfortunately earned the epithet ‘Truly Shambolic Bank'".
"The regulator does not make such criticisms lightly. I am 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," Morgan said, adding that the levels of compensation have in many cases been insufficient.
A spokeswoman for TSB said: "We will be updating the Treasury select committee and will continue to fully support its inquiry. In the meantime, we continue to focus on doing whatever it takes to put things right for our customers, and ensuring that no customer will be left out of pocket as a result of the recent IT issues." µ
What could possibly go wrong...
Committee clams firm failed to implement 'adequate security'
Meme Ban means Meme Ban
It's anonymous data at first but the NYT figured out how to make it personal