The TSB chief executive is under mounting pressure to quit after MPs said the bank’s board should give “serious consideration as to whether his position was sustainable”.
The Treasury select committee said Paul Pester had “not been straight with” MPs and customers about TSB’s recent IT meltdown, and that the bank’s public communications had often been “complacent and misleading”.
The MPs said they had lost confidence in his ability to provide a full assessment of the problems and deal with them in the best interests of customers.
However, hours later, the bank rebuffed the apparent call for Pester to step down, saying that he continued to have the full support of the board.
The letter from Nicky Morgan, chair of the select committee, to Richard Meddings, chairman of TSB, came 24 hours after Pester had a bruising encounter with MPs, some of whom suggested he should consider quitting.
Shortly before Pester’s appearance before the committee, the Financial Conduct Authority launched a stinging attack on him over the bank’s failure to be open and transparent with customers when a botched IT upgrade locked up to 1.9 million people out of their accounts.
The FCA accused him of “portraying an optimistic view” of services after the botched upgrade in late April.
More than six weeks later some TSB customers are still facing disruption to services, and at the committee hearing on Wednesday it emerged that 1,300 customers had had money stolen from their accounts – in some cases their life savings – by fraudsters exploiting the meltdown.
The letter to Meddings stated: “The committee considers that the TSB board should give serious consideration as to whether Dr Pester’s position as chief executive of TSB is sustainable.
“The committee has lost confidence in his ability to provide a full and frank assessment of the problems at TSB, and to deal with them in the best interests of its customers.
“It is concerned that, if he continues in his position, this could damage trust not only in TSB, but in the retail banking sector as a whole. I ask that the board consider the committee’s view as a matter of urgency.”
Commenting on the correspondence, Morgan said that from the time the IT problems at TSB had begun the bank’s public communications had “often been complacent and misleading”.
She added: “This tone has been set from the top – by Paul Pester – and whether intentionally or not he has not been straight with the committee and TSB customers. Dr Pester’s statements that ‘everything is running smoothly for the vast majority of our … customers’ and that ‘there will be no barriers’ to customers switching accounts, and his denial that there were problems on TSB’s fraud reporting line, are all examples of this.
“The Treasury committee, therefore, has lost confidence in Dr Pester’s position as chief executive of TSB, and considers that the TSB board should give serious consideration as to whether his position is sustainable.”
During often heated exchanges with MPs on the select committee during Wednesday afternoon, Pester and two other executives, Meddings, and Miquel Montes, chief operations officer of the Spanish parent company, Sabadell, were asked, “why are you still in your job?” and “can we be certain that some heads are going to roll?”
The Labour MP John Mann asked Pester: “Will you fall on your sword before you’re pushed?”
The chief executive responded: “I believe I’m the right person to fix this problem for our customers.”
Morgan has also written to Andrew Bailey, the FCA chief executive, and Sam Woods, chief executive of the Prudential Regulation Authority.
Up to 1.9 million of TSB’s 5.2 million customers began experiencing problems with online and mobile banking services on 23 April after accounts were migrated from an IT system inherited from the previous owner, Lloyds Banking Group, to Sabadell’s technology operation.
In a reply to Morgan, Meddings said the bank had “made good progress in resolving the recent IT issues, and TSB is now functioning at, or close to, normal for the majority of TSB customers”.
He said: “We recognise that we still have areas where we need to improve performance for our customers, and we do not underestimate these remaining issues. The important point is that this progress has been achieved under the leadership of Paul Pester, who continues to have the full support of the TSB board.”
Meddings said the board believed that communications since the upgrade had been made in good faith and based on the information available at the time.