TSB: IT issues cost £176.4m

It reported a loss of £107.4m in the six months to June 30, compared with a profit of £108.3m last year.

In April, almost two million TSB customers lost access to online banking services after the introduction of a new IT system failed.

The problems left customers unable to access their accounts or make payments, while others were shown incorrect information, and in some cases the details other people’s accounts.

The issues stemmed from when TSB split from Lloyds Banking Group. It continued to rent a banking platform from Lloyds while it constructed its own, Proteo4UK.

That system was intended to go live over the weekend of April 21 and 22 as it moved its customers’ data from the old platform to its new one.

Access to accounts through the mobile app, online banking, telephone banking and branch service levels are now “much-improved”, the bank said.

“Our focus remains on minimising the level of future service interruptions for our customers,” it added. “No TSB customer will be left out-of-pocket as a result of these IT issues, and no customer complaint will go unanswered.”

To ensure customers are compensated “properly and as quickly as possible”, TSB has created a “dedicated and experienced” team of more than 260 people.

As at June 30, 2018, TSB’s total customer lending was £31bn, total customer deposits stood at £29.6bn and its common equity tier 1 capital ratio stood at 19.2 percent.

Around 26,000 customers switched their bank account away from TSB, while just over 20,000 customers opened a new bank account or switched their account to TSB in the second quarter of the year.

Paul Pester, TSB chief executive, said: “We’re making progress in resolving the service problems customers experienced following our IT migration, and we will continue to work tirelessly until we have put things right. I know how frustrated many customers have been by what’s happened. It was not acceptable and was not the level of service that we pride ourselves on.

The IT problems attracted significant criticism, with MPs in the Treasury Committee stating they had “lost confidence” in Pester’s leadership of the bank, while the Financial Conduct Authority (FCA) confirmed it would investigate the fiasco. Similarly, the Information Commissioner’s Office (ICO) has also launched a probe into what went wrong.

Chair of the Treasury Committee, Nicky Morgan MP, wrote in June to TSB chair, Richard Meddings, calling on him to “give serious consideration as to whether Dr Pester’s position as chief executive of TSB is sustainable”.

“The committee has lost confidence in his ability to provide a full and frank assessment of the problems at TSB, and to deal with them in the best interests of its customers,” she said in the letter. “It is concerned that, if he continues in his position, this could damage trust not only in TSB, but in the retail banking sector as a whole. I ask that the board consider the committee’s view as a matter of urgency."