Summary: MPs hit out at TSB compensation offers as fraud hits customers
TSB bosses faced another bruising session in front of the Treasury select committee as they were quizzed about the continuing IT meltdown which hit 1.9m of its customers.
Chief executive Paul Pester said 2,200 customers had suffered fraudulent attempts to access their accounts since the IT problems first surfaced. Of these 1,300 had received compensation.
Earlier FCA boss Andrew Bailey mentioned a figure of 10,600 incidents, but Pester clarified that the figure referred to alerts sent to accounts when suspicious activity was detected by the bank’s systems.
Pester said the bank had set up a dedicated fraud line to deal with the overwhelming number of enquiries, and waiting times were only a few minutes. But committee chair Nicky Morgan said she had received reports during the meeting of people holding on for nearly 30 minutes before hanging up.
MP John Mann expressed amazement when Pester and TSB chair Richard Meddings professed ignorance of a case when someone had received a letter giving details of someone else’s bank account.
He also slammed the level of compensation - £100 - awarded to a constituent for their ruined wedding.
With Pester profusely apologising several times during the course of the meeting, Mann said the level of compensation amounted to “£1 per apology”.
Morgan described the level of compensation as “absolutely inadequate.”
Overall Pester said the bank had spent £70m on compensation and additional resources to cope with fixing the problems so far.
He was also forced to deny he had deliberately misled the committee at its previous hearing.
Mann asks if heads will roll, but Meddings says that will depend on the outcome of an investigation by Slaughter and May into the causes of the fiasco.
Pester says he will not fall on his sword since he wants to fix the problems, while on the thorny question of possible golden parachutes, Meddings says if people are found to be grossly negligent that will be taken into account in the terms of their departure.
The meeting ended with Nicky Morgan saying she expected the TSB executives to be called back again to update the committee on the progress in fixing the problems.
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.
In her closing remarks Morgan says unfortunately the saga goes on. The FCA letter says ... TSB has not been open and transparent. The committee cannot remember such a letter from the FCA.
She says, you have confirmed the IT migration has lead to people being fraudulently deprive of their money, life experiences such as weddings and house purchases ruined, the compensation is absolutely inadequate and the problems continue.
This cannot be something you want, ultimately it is not only damaging to TSB but also to other banks in the sector and to online banking.
Unfortunately, although we are grateful to you for your time... it did take an hour and half for you to thank your staff.
I suspect we will ask you to come back again, because we will be keeping a very close eye on what is going on to put all of this right.
Question: will it look at culpability of individuals and the role of the Spanish bank?
Meddings says it will look at the relationship with the platform supplier.
Question: what is the scope of the instructions to Slaughter and May?
Medding says we can provide the terms of reference. The reason it’s a law firm is that part of the terms is about the governance around the decision made to migrate.
Question: how many people have switched to TSB?
Pester says we have not been attracting many new customers to our current accounts.
Morgan asks how much overtime are staff having to do in branches?
Pester says he can’t give figures. Branch transactions are taking longer than we would like. Branches are not operating normally.
Morgan says some of the fraud is done with sim cards so is TSB in contact with the mobile companies?
Pester says yes they have been.
Morgan says there are people trying to call the fraud line and have waited 15 minutes and 27 minutes and given up.
She asks when the Slaughter and May report will be published.
Meddings says there is no date but they have started work. He says he hopes it’s several weeks, not longer than that. But not before the summer holidays. They haven’t given me a deadline date.
Montes is asked if Sabadell should be paid by TSB for this failure?
He says, we are quite conscious about the damage to TSB customers. We know most of it came from bad functioning of the system after migration. We have committed resources to work to a solution. There have not been any kind of discussions about payments,. There won’t be until the solution is finished.
Question: who was really in charge here during this process?
Pester: The responsibility and decision was with the TSB board.
Question: Was the timing, decision making, risk management controlled by TSB?
Pester: Ultimately yes although we used a range of suppliers to opine whether we were in a position to migrate.
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