MPs talk of ‘Truly Shambolic Bank’ as chief says 400-500 customers are quitting daily since botched IT switch

This article is more than 2 years old

This article is more than 2 years old

TSB has admitted that 1,300 customers had money stolen from their accounts – in some cases their life savings – by fraudsters exploiting the bank’s recent IT meltdown.

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The bank’s embattled chief executive, Paul Pester, also disclosed that the number of people quitting the bank in the wake of the botched IT upgrade was running at 400 to 500 a day, and currently totalled 12,500 since the problems first emerged in late April.

During often heated exchanges with MPs on the Treasury select committee on Wednesday afternoon, Pester and two other executives, TSB chair Richard Meddings and Miquel Montes, chief operations officer of parent company Sabadell, were lambasted for paying “pitiful, embarrassing, cringeworthy” levels of compensation to victims of the fiasco.

They were asked “Why are you still in your job?” and “Can we be certain that some heads are going to roll?”

Nicky Morgan, Conservative MP and chair of the committee, told Pester at the end of the hearing that TSB had “unfortunately earned the epithet ‘Truly Shambolic Bank’”.

Pester apologised repeatedly, prompting one MP to say he had “set a new record for apologies”, but rejected suggestions he should consider stepping aside, saying: “I believe I’m the right person to fix this problem for our customers.”



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Up to 1.9 million of TSB’s 5.2 million customers began experiencing problems with online and mobile banking services on Monday 23 April after accounts were migrated from an IT system inherited from the previous owner, Lloyds Banking Group, to Spanish parent Sabadell’s technology operation.

More than six weeks later, some TSB customers are still facing disruption to services. On Wednesday the bank’s website admitted that some were “having difficulties and seeing an error message” when making payments, and it stated that some business account holders were “still having issues”.



Pester’s appearance before the committee came shortly after the Financial Conduct Authority (FCA) launched a stinging attack on the bank’s bosses over their failure to be open and transparent with customers.

The bank revealed it had racked up a year-to-date bill of about £70m to cover various costs relating to the problems, which included £11.2m in compensation to customers who had suffered fraud – a figure likely to reach closer to £20m once amounts not yet paid were included.

During the hearing the FCA’s chief executive, Andrew Bailey, said there had been about 10,600 fraud “incidents” relating to the IT meltdown.

However, Pester said that the number who had lost money from their accounts to fraudsters was 1,300. These people had now been refunded, he added.

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The chief executive said he was shocked to read reports of customers who had waited on the phone for up to nine hours to disclose incidents of fraud. In some cases their life savings had been taken from them.

However, Pester said 70 times the normal level of fraud attacks were seen last month, and he described this as “an unprecedented attack across UK banking from organised crime”, adding that TSB was working with a range of agencies in an attempt to track down the perpetrators.



Morgan gave details of a self-employed businessman, Paul Catherall, who had £24,550 stolen from his account last month.

The bank later made a payment into his account of the same sum, but had offered only £192 compensation, of which £42 was for the cost of phone calls made by Catherall. Morgan said: “I don’t think £192 is nearly sufficient.”

She added that some people’s major life experiences such as weddings and house purchases had been ruined by what had happened.

The bank also disclosed that it had cancelled overdraft fees and charges totalling £29m in the wake of the problems.

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The committee also heard that 370 former customers had been affected by a blunder which meant people switching away from TSB to another bank found that regular payments had been cancelled because companies were told that they had died. Pester said a software error was behind the problem, and people were being contacted and offered compensation.

One MP, Labour’s John Mann, asked: “How many heads are going to roll?”

Meddings said the board had hired City law firm Slaughter & May to lead an independent review into the meltdown, which was going to be thorough. He added: “If I’m found to be culpable, then the actions will attach to me.”