TSB boss Paul Pester is quitting the bank five months after an IT meltdown left thousands of customers locked out of their accounts.
The chief executive, who has led TSB for seven years, oversaw the botched migration of customer accounts from systems inherited from the Scottish bank’s previous owner, Lloyds Banking Group.
Despite the debacle, which cost TSB more than £175m, Pester will be handed a £1.2m severance payment, plus a £500,000 bonus, The Daily Telegraph reports.
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He will be replaced by Richard Meddings, “with immediate effect”, while the firm seeks a new chief executive, says The Guardian.
In a statement announcing Pester’s resignation, Meddings said that the bank’s IT services “are much improved” since the accounts migration, in April, but admitted that “there is more to do to achieve full stability for customers”.
Pester had forfeited a £2m bonus shortly the IT fiasco.
What happened?
On 19 April, TSB announced through its Twitter feed that it would be upgrading its online systems between 4pm on Friday 20 April and 6pm on the following Sunday.
The company warned customers that some services, such as online banking, making payments or transferring money, wouldn’t be possible during the two-day upgrade period.
However, the changes that TSB implemented to its online services turned out to be far greater than the simple software upgrade that such services normally required.
According to Wired, TSB was planning to shift the accounts of its 5.4 million customers from an older IT system that was used when the company was part of Lloyds. Although the two banks separated in 2013, TSB was still using Lloyds’s system to manage its customers.
Wired reports that TSB moved its online operations to a cloned version of the Lloyds system between 20 and 22 April. The new system has been developed by the Spanish banking group Banco Sabadell.
Shortly after the switchover took place, customers said they were unable to access their online accounts. There were also reports of a series of glitches and data leaks.
How were customers affected?
On the evening of 22 April, complaints poured in on social media. The majority of customers claimed they had either received an error message when logging into the service or were denied access altogether.
Some cases were more extreme. One customer claimed he was £13,000 in credit when he logged in. When he used the service a few hours later, the money appeared to have vanished from his account.
One woman tweeted that she had seen the account details of another customer when she used TSB’s online banking service. She described the glitch as “a serious DPA [data protection act] breach”.
It is believed that several customers faced financial difficulties as a result of the crisis.
TSB customer Colin Patterson told BBC News www.bbc.co.uk/news/business-43877667 that he was unsure whether he would be able to pay his rent on time as he couldn’t access his online account.
Meanwhile, photographer Paul Clark revealed to the broadcaster that he had no way of knowing which of his clients had paid him.
“It’s a fiasco,” he said.
Is it being investigated?
Yes. The Financial Conduct Authority (FCA) launched a formal investigation into the IT failure in June.
In a letter to Parliament’s Treasury Select Committee, FCA chief executive Andrew Bailey said that the banking regulator was “dissatisfied with TSB’s communications with its customers” and that it “had concerns that TSB was not being open and transparent about the issues experienced”.
Bailey suggested that TSB should have shown greater caution about its services, rather than portraying an overly “optimistic view”, and that the bank had failed to compensate customers quickly enough.
TSB said it would “continue to focus on doing whatever it takes to put things right for our customers”.
What has been done to remedy the problems caused?
The bank has promised that “no TSB customer will be left out of pocket”. So far, it has waived current account overdraft fees and interest charges for March, April and May, and is increasing its interest rate on its Classic Plus account from 3% to 5%.
Those struggling to log in to mobile or internet banking have been told to close the app or internet browser fully and try again. If this doesn't work, the bank suggests visiting an ATM, TSB branch or the Post Office to view balances and take out cash.
The bank has offered answers to other customer questions on its website.
