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TSB fined £48.6 million over operational resilience failures

TSB fined £48.6 million over operational resilience failures

UK regulators have levied a £48.6 million fine on the TSB for a bungled IT migration programme in 2018 that locked customers out of their accounts for weeks and led to months of ongoing technical problems.

In April 2018, TSB updated its IT systems and migrated the data for its corporate and customer services on to a new IT platform from parent company Banco Sabadell. While the data itself migrated successfully, the platform immediately experienced technical failures. This resulted in significant disruption to the continuity of TSB’s banking services, including branch, telephone, online and mobile banking.

All of TSB’s branches and a significant proportion of its 5.2 million customers were affected by the initial issues. Some customers continued to be affected by some issues and it took until December 2018 for TSB to return to business-as-usual.

The fiasco cost the bank £366 million in remediation and compensation claims and the chief executive his job.

Now the The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have fined the bank £29.7 million and £18.9 million respectively for operational risk management and governance failures, including management of outsourcing risks, relating to the IT upgrade programme. This includes a 30% discount owing to TSB's acquiescence with the findings. Without this discount, the FCA and PRA would have imposed a combined financial penalty of £69.5 million.

The regulators’ found that TSB failed to organise and control the IT migration programme adequately, and it failed to manage the operational risks arising from its IT outsourcing arrangements with its critical third-party supplier.

Mark Steward, FCA executive director of enforcement and market oversight says: “The failings in this case were widespread and serious. The firm failed to plan for the IT migration properly, the governance of the project was insufficiently robust and the firm failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems."

In a statement, TSB CEO Robin Bulloch, says: “We’d like to apologise again to TSB customers who were impacted by issues following the technology migration in 2018. We worked hard to put things right for customers then and have since transformed our business. Over the past four years, we have harnessed our technology to deliver new products and better services for TSB customers.”

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