IT meltdown at TSB due to ‘lack of common sense’
TSB bosses have been accused of lacking basic common sense in a damning report on an IT meltdown that locked two million customers out of their accounts last year.
Yesterday’s report from City law firm Slaughter and May said TSB rushed its transition to a new technology platform, failing to test it properly.
When the updated online banking platform went live on April 22, 2018, chaos ensued. Around two million of TSB’s five million customers were shut out of their own bank account for weeks and on the first day waited an average of 90 minutes for an adviser on the phone.
Several services were unavailable in branches and some account-holders claimed to be able to access other customers’ details. By the second week, TSB
– which is owned by Spain’s Banco Sabadell and has its headquarters in Edinburgh – had received more than 33,000 complaints and fraudsters began targeting confused customers.
The report has criticised the bank’s actions in the years leading up to the technology switch, highlighting poor communication between its board and executives leading the programme.
The system still had more than 2,000 defects when it went live, but the board – first led by Will Samuel and then Richard
Meddings from February 2018 – were only told about 800.
The report said that while the board had asked some questions concerning the plan ‘there were certain additional, common sense challenges that we might have expected the TSB board to raise with the executive’.
These included how the switching programme was set such a tight deadline when parts of it were seven months behind, whether the reasons for the delays had been addressed and what evidence there was that the testing of the new IT platform would pick up pace.
Mr Meddings has refuted many of the report’s findings, claiming that the catastrophic failure was down to the design of two data centres. He said: ‘There are areas where we disagree [with Slaughter and May].’
He claimed that the law firm had outlined a number of potential problems, but had given no weight as to which ones had actually caused the meltdown.
When questioned on whether there had been a communication breakdown, Mr Meddings added: ‘I don’t think that’s wholly fair.
‘It was a very complex programme. The thing we missed, that was the primary cause of the issues, was inconsistent configuration of the
‘Common sense challenges’
two data centres.’ The scandal cost TSB around 80,000 customers who switched bank and around £366million to cover the fallout.
Among the costs, £130million went in compensating customers, while the 260-page Slaughter and May review cost £21million.
The crisis erupted after TSB attempted to shift its technology systems from those run by Lloyds Bank, its former owner, to a new platform created by Sabadell.
TSB had originally been planning to use Lloyds’s systems until 2024, but the fee it was paying to Lloyds was set to be ramped up from 2017.
City watchdog the Financial Conduct Authority and the Bank of England’s regulator are both still investigating the lender.
COULD the report into the TSB computer calamity have been more excoriating?
Blinded by a drive to save money, lavishly remunerated bosses at the high street bank installed a new IT system. Incredibly, they failed to test it properly. And when it went live in April last year, it suffered a meltdown on an unprecedented scale.
Some two million people were locked out of their accounts and in a monumental security breach, hundreds saw scammers ransack their savings.
Ten years after the financial crisis, customers are still treated with perverse disdain. We have to wonder: Have the banks actually learned any lessons?