WHY WAS HE ALLOWED TO HANG ON?
The most astonishing aspect of the departure of Paul Pester from Spanishowned TSB is that it has taken so long for him to go. But what will really stick in the craw of customers and staff at the floundering bank is this fat-cat chief executive – a keen triathlete – is marching off with a sports bag stuffed with cash.
It is unconscionable that directors should agree to such a pay- off – a cool £1.7million – when Pester has presided over events that have pushed a once profitable institution into a loss of £107million and counting.
Five long and painful months have passed since TSB suffered the most humiliating and far-reaching IT failure in modern banking history.
Many of its five million customers were deprived of access to their accounts and exposed to the risk of widespread fraud – 70 times the normal level – with more than a 1,000 people suffering financial loss.
The cost of fixing the IT problem and compensating customers has reached £175million already.
By June, a reported 12,500 customers had asked to switch accounts to another provider, while it was reported that the bank was losing 2,000 customers a week.
however, it took another tech crash over the past few days, with disruption to online and mobile banking, for Pester to be shown the door.
he’d demonstrated a bulldog-like determination not to be shifted, even though his stewardship has been severely criticised by both the powerful Treasury select committee of the Commons and Britain’s top banking enforcer, Andrew Bailey, at the Financial Conduct Authority (FCA).
Now, the bank that promised to change the mould of British banking and adopt a ‘John Lewis-style’ model by treating staff as partners and putting the customer first is sending Pester off with his full annual salary of £1.2million (a contractual obligation, says the bank) plus a bonus – yes a bonus! – of £480,000 which was earned before the technology foul-up.
For Pester, but sadly not for TSB’s longsuffering customers and staff, it’s as if the IT meltdown never happened. It is ten years since the financial crisis, when ‘challenger lenders’ such as TSB – taking on the big high street banks – were meant to herald a new, fairer and better-behaved era in banking. Instead, as Pester’s pay-off shows, nothing much has changed. Indeed, there is still the utterly farcical possibility that Pester could even pass ‘Go’ on the Monopoly board yet again. The way in which incentive rules are drawn means he might be entitled to another hatful of bonuses for his role in ‘guiding’ TSB out of the crater of his own making.
Responsibility for the technology meltdown at TSB is still to be fully established and there are two high-level investigations in progress. One is being conducted by the legal firm Slaughter & May and TSB chairman Richard Meddings – who has taken on Pester’s responsibilities temporarily – and promises publication of an interim report by the end of the year.
The official investigation is being conducted jointly by the FCA and the Bank of england, neither of which are known to reach speedy conclusions.
And yet, in a shameful act, the bank has authorised a full year’s salary for Pester before the outcome is known. AT the core of TSB’s problems was the bank’s decision to switch to a new digital/online banking platform borrowed from its owners, the Barcelona-based bank Sabadell, without adequate testing or any systems back-up.
It simply switched off its old computer system, which was run for it by Lloyds Banking Group, and replaced it with the Sabadell platform.
Some customers found that when they logged in, they’d gained access to other people’s accounts. Others were locked out of their own accounts for weeks.
Some 370 were deemed to have ‘died’ and their regular direct debits and standing orders cancelled.
Instead of offering instant apologies and compensation, TSB went into defence mode, pretending that the debilitating chaos wasn’t serious and dissembling to customers, politicians and regulators.
Yet it has been guilty of greed, carelessness and abysmal customer service.
Just how out of touch and careless the bank remains was illustrated again yesterday when Meddings sent a letter to the chairman of the Treasury select committee, Nicky Morgan. It was dated incorrectly and began with the words: ‘Dear Morgan...’
Who can trust a bank that can’t get even the smallest things right?