The CEO of TSB will forfeit a £2m bonus payment in the light of an IT failure that left thousands of customers locked out of their accounts, as MPs accused the bank boss of being “extraordinarily complacent”.
During a bruising evidence session before the Treasury select committee, TSB chief executive Paul Pester and the bank’s chairman, Richard Meddings, said they had received 40,000 complaints about the outage but did not know exactly how many of the bank’s 1.9 million online customers had been affected.
Meddings told MPs that Pester had volunteered to give up a £2m bonus associated with the migration to a new IT system, hinting that other executives could also have their bonuses slashed. But Pester could still receive up to £1.3m in other bonuses for 2018, on top of a further £1.3m in basic pay, benefits and pension contributions.
Pester declined to predict when the problems, which have been affecting customers for 10 days, would be fixed. The committee chair, Nicky Morgan, accused Pester of being “extraordinarily complacent” after he said the bank’s move to a new IT system, which triggered the problems, had mostly run smoothly.
“What we are hearing this afternoon is the most staggering example of a chief executive who seems unwilling to realise the scale of the problem that is being faced,” she said.
Pester insisted that 95% of customers were now able to log in to the bank’s mobile app and website without problems.
However, MPs on the committee read out a series of emails and tweets from customers that indicated ongoing chaos. One customer said they had spent 14 hours on the phone to customer services, while another said they had been left unable to pay their gas and electricity bills and a third said they risked a house purchase falling through because they could not access bank statements.
Morgan questioned the notion that the IT problems were mostly fixed, saying customers had been put in an “impossible financial situation”.
Simon Clarke MP said Pester’s belief that most customers were now banking without problems could not be true unless there was a “mass conspiracy by members of the public”.
Morgan added that two Treasury committee staff members had found they could not log in during the evidence session, drawing an unexpected reply from Pester.
“It’s nice to know we have so many customers in the room,” he said. “Thank you very much for using TSB.”
He said he was “disappointed” that some customers, who he admitted were being made to wait 30 minutes for their phone calls to be answered, were hanging up in frustration.
TSB has marketed itself in large part on its ability to provide better customer service than larger high street lending rivals.
However, customers began experiencing problems with their accounts on Monday 23 April after the bank – now owned by Spanish lender Sabadell – migrated from an IT system inherited from the previous owner, Lloyds Banking Group.
Sabadell had hoped to make more than £100m in annual savings by using the new system, known as Proteo in apparent reference to Proteus, a Greek god of the sea often associated with change.
Pester insisted the switch to the new system had been rigorously tested beforehand and was “running smoothly” for the most part but that it was struggling to deal with high levels of demand.
“It’s the equivalent of having a shop that’s too small to let the number of customers in,” he said.
He said around 50% of customers had experienced problems with their accounts on the first day of using the new system, with 40,000 complaining, compared to an average of around 3,000 during a typical 10-day period. Pester said around 22,500 have had their problem “acknowledged” by the banks so far.
Morgan referred to a comment made by the bank’s chief information officer in December 2017, who said the switch to Proteo would make TSB “a digital business that just happens to be a bank”. She said TSB “is neither a digital business, nor a bank. In fact it’s a broken bank.”
Pester and Meddings said customers would receive compensation from TSB, not only for any financial loss but also for emotional distress and inconvenience, adding that no customer would be left “out of pocket”.
“We apologise profusely for the issues we’ve caused our customers,” Pester said, adding that it had been a “terrible decision” to go ahead with the switch to a new IT platform.
But he said that TSB was needed to challenge the so-called Big Five high street banks and provide greater competition.
The accountancy firm Deloitte is advising on the bank’s compensation strategy, while TSB has recruited IBM to fix the IT problem and the City law firm Slaughter and May to investigate the cause.
If you would like to find out more information, please visit: https://www.tsb.co.uk/