TSB crisis: the key questions bank bosses will need to answer

TSB bosses will face intense questioning from MPs on the bank’s catastrophic IT failure on Wednesday – as it emerged that, on the crucial first day of the month, standing orders from some customers went awry.

As the embattled bank entered its tenth day of service failures, and as it began processing millions of payments set for the first day of the month, TSB admitted that some customers were now having problems with their standing orders.

The bank told customers: “Direct debits are working normally. We know there are some issues with a small number of standing orders today, we are working hard to resolve these. Payments through our mobile app and internet banking are available, but we know some customers are experiencing difficulties at the moment and seeing an error message.”

Some TSB customers who have set up rent payments to go out on the first day of the month reported that their payments had been bounced back with no explanation. Customer Patrick Ryan wrote on Twitter: “This is going to cost me severe problems as I’m now late with my rent. What the hell is going on?”

What does the TSB fiasco tell us about banking in Britain? | Patrick Collinson

Read more

Today TSB chief executive Paul Pester, TSB chairman Richard Meddings and Miquel Montes, group chief operating officer at parent group Sabadell, will be forced to explain what really is going on to MPs on the Treasury committee, led by Nicky Morgan.

So what are the key questions MPs will be firing at the bank’s bosses?

Why didn’t the new computer system work? TSB spent, by its own admission, 2,500 man years on the IT transfer from Lloyds, with 1,000 people involved in one way or another. Why did it fail? Did TSB perform thorough testing prior to flicking the switch on the migration of user accounts? Why did the testing not uncover the issues? How thorough can it have been, given issues became apparent almost immediately?

Was there no back-up? Sabadell’s takeover of TSB was predicated almost entirely on the £100m savings to be made from cutting TSB free from the £214m-a-year bill it had to pay Lloyds for continuing to run the bank’s accounts. Was it rushed through, without sufficient back-up? Why was the old system not still in place to mitigate customer troubles when it was clear Proteo4UK, the name given to the new platform, was not up to the task?

Why were customers misinformed? The transition was scheduled from Friday evening to Sunday evening. When failures began appearing, almost immediately afterwards, TSB initially said the problems were only “intermittent”. Early on Wednesday, Pester said the system was “up and running” again but customers continued to report problems.

Who was in control? Much is being made of a rift between TSB in the UK and Sabbadell in Spain. Pictures on LinkedIn showed celebrating IT workers in Madrid toasting the “success” of the transfer. Pester is now paying for IBM specialists to fix the problems. Will Pester pin the blame on head office in Spain or other external contractors?

Will Pester still receive a £1.6m bonus? He may try to dodge this by saying bonuses are at the discretion of the remuneration committee, and nothing has been decided. But MPs are likely to press Pester on whether he think he deserves a bonus after this fiasco.

How will TSB compensate customers? The bank has promised no one will be left out of pocket. But will they receive compensation only if they complain? Will the bankcontact customers? And what does it expect the compensation bill to be?

Did regulation work? MPs will want to know the extent to which the giant transfer of 1.3bn records was supervised by regulators like the Financial Conduct Authority, and what it says about the robustness of Britain’s banking infrastructure. TSB will have to tell MPs how far the debacle has exposed customers’ data, and how much, if at all, any accounts have been compromised.