When you thought it couldn’t get any worse, Andrew Bailey, the Chief Executive of the Financial Conduct Authority, in an unusually strong letter, says that when giving evidence to the Treasury Committee in May, Paul Pester, Managing Director of TSB, was “portraying an optimistic view of the services, for example by noting that the majority of TSB customers could transact as normal” and that “greater caution would have made sense”. Mr Bailey then says Mr Pester “may have been in possession of an initial set of slides by IBM which provided initial views on the incident, and could therefore have shed more detail on this with the Committee”.
The FCA confirmed that the regulator would be launching a formal investigation into the Bank’s IT meltdown suggesting its poor response has damaged trust in the entire banking sector.
In his response, Mr Bailey also said:
- “The FCA has been dissatisfied with TSB’s communications with its customers and we have had concerns that TSB was not being open and transparent about the issues experienced”.
- “The current communications were perceived as poor, and could reduce trust in TSB and in the banking sector as a whole”.
- “TSB have not met the requirement in the Payment Services Regulations to refund all relevant customers as soon as practicable and in any event by the end of the business day after the day which it becomes aware of the fraud”.
In commenting on Mr. Bailey’s letter, Rt Hon Nicky Morgan, Chair of the Treasury Select Committee said:
“The regulator does not make such criticisms lightly. I am deeply concerned by TSB’s poor communications about the scale and nature of the problems it has faced; by its response to customer fraud; and by the quality and accuracy of the oral and written evidence provided by Dr Pester to the Committee”.
When it started TSB said that it wasn’t like other banks and that it would be governed by a set of clear values. It said: “Our values guide us in all we do and how we do it. We are: straightforward, collaborative, transparent, responsible and pioneering.” Many of those values have been shot to pieces by Mr Bailey’s letter and the brand is now so toxic, it’s difficult to see how it can recover from this IT shambles.
I hate to say it but we were right. Members will recall that when the migration was postponed last November, Paul Pester said it was because of an impending interest rate rise. According to the FCA that was not true. The FCA now says: “TSB took the decision to delay migration from November 2017 to April 2018 because it assessed that there were unacceptable levels of risk to customers and its operating model”. No mention of interest rate rises!
At the time we made it clear that Mr Pester’s excuse was nonsense. In a Newsletter to members we said: “Members are not stupid they have heard the rumours like everyone else. The systems developed by Sabadell are not fully functional yet and there is lots of testing still to do. Moreover, some of the coding is apparently not up to scratch, which is causing further delays”.
Saying what needs to be said is what independent trade unions do. We say it as it is and are not there simply to act as a mouthpiece for the Bank, like Accord. TSB and Paul Pester should have listened.