TSB CEO and chair to face grilling by MPs over IT chaos

The embattled TSB chief executive is to face intense questioning from MPs as the bank stumbled into its second week of chaos following its catastrophic IT failure.

Paul Pester, along with the bank’s chair Richard Meddings and a representative from Spanish parent group Sabadell, will be hauled in front of the Treasury committee on Wednesday to explain how TSB’s IT systems collapsed more than a week ago, and how they will compensate affected customers.

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Committee chair and Conservative MP Nicky Morgan said: “We will take evidence from TSB and Sabadell representatives to find out how they got into this mess, who is responsible, and how they are putting it right.”

The botched IT transfer from TSB’s former owner Lloyds to Banco de Sabadell was designed to reap cost savings of £100m a year but Pester admitted last week that the bank was “on our knees”.

TSB said on Monday its online banking services were “available again but some customers may still have difficulties accessing and using these services”.

A week after problems first emerged, TSB’s online services continued running significantly below capacity, with some customers reporting they were still blocked from their accounts. All TSB mortgage customers have been prevented from viewing any details of their account online for more than a week.

The committee hearing is likely to focus on what TSB will do to compensate customers and if Pester will still receive a bonus.

Morgan said: “The Treasury committee is extremely concerned by the problems at TSB, and by the apparent miscommunication to customers about the extent and nature of these problems.”

Nicky Morgan.



The Treasury select committee is chaired by Conservative MP Nicky Morgan. Photograph: Antonio Olmos for the Observer

Pester has until now refused to answer questions about his £1.6m bonus, which was due to be paid once the IT migration is complete, along with bonuses for 30 other senior managers.

In a letter to Morgan released ahead of the hearing, Pester admitted that on the first day of the IT chaos on Monday last week: “We were only able to serve c.200,000 sessions via our website versus an expected level of c.450,000.”

Pester also admitted that as customers tried to ring the bank instead, “average wait times were close to one hour; by Thursday this had remained high at approximately 30 minutes”.

TSB admitted that only six in 10 of its branches had technology that was fully functioning even by the end of the week.

Pester’s letter said the “issues started to occur after TSB’s migration onto a new platform built for TSB by our parent company, Sabadell, and operated by Sabadell’s technology subsidiary, Sabis”.

But the banking software at the heart of TSB’s troubles was doomed to failure from the start, an insider with extensive knowledge of the systems involved told the Guardian last week.

TSB has promised to repay customers left out of pocket. “I want to reassure the committee that we are working around the clock to put things right for our customers,” Pester wrote in his letter to Morgan. “As I have said publicly, no customer will be out of pocket as a consequence of these problems.”

Tuesday will be another crucial test for the bank’s IT, with the first day of the month a popular time for monthly salary payments, direct debits and standing orders.

TSB insisted that “fundamental record keeping and account management functions within the platform are working as designed. This means that the fundamental components of the bank, such as regular payments, debit cards, credit cards, and ATMs, are all working as normal”.

However, Twitter users continued to post images of their accounts which show payment instructions dated 2099.

Fraudsters have also tried to cash in on the IT meltdown, prompting the bank to warn customers to be wary of emails and tweets claiming to be from TSB.

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