Technical failures means clients could not get access to banking services.

UK regulators have fined TSB Bank £48.65 million ($59.3 million) for a variety of failures linked to an IT upgrade that shut out clients from the bank’s services in 2018 for a period of several months. Up to 5.2 million customers were affected.

The fine was imposed yesterday by the Financial Conduct Authority and the Prudential Regulation Authority.

The punishment was imposed for “operational risk management and governance failures, including management of outsourcing risks, relating to the bank’s IT upgrade programme”, the FCA said in a statement. 

“The failings in this case were widespread and serious which had a real impact on the day-to-day lives of a significant proportion of TSB’s customers, including those who were vulnerable,” Mark Steward, FCA executive director of enforcement and market oversight, said.

TSB has paid £32.7 million in redress to customers who were affected.

TSB Bank’s chief executive Robin Bulloch, said: “We’d like to apologise again to TSB customers who were impacted by issues following the technology migration in 2018. We worked hard to put things right for customers then and have since transformed our business. “Over the past four years, we have harnessed our technology to deliver new products and better services for TSB customers.”

Regulators
“Technical failures in TSB’s IT system ultimately resulted in customers being unable to access banking services,” the FCA said.

In April 2018, TSB updated its IT systems and migrated the data for its corporate and customer services on to a new IT platform. While the data itself migrated successfully, the platform immediately experienced technical failures. This resulted in significant disruption to the continuity of TSB’s banking services, including branch, telephone, online and mobile banking, it said.

All of TSB’s branches and a significant proportion of its 5.2 million customers were affected by the initial issues. Some customers continued to be affected by some issues and it took until December 2018 for TSB to return to business-as-usual. 

“TSB’s IT migration programme was an ambitious and complex IT change management programme carrying a high level of operational risk. Its success was critical to TSB’s ability to provide continuity of critical functions and safety and soundness,” the FCA statement said. “However, the regulators’ found that TSB failed to organise and control the IT migration programme adequately, and it failed to manage the operational risks arising from its IT outsourcing arrangements with its critical third-party supplier.”

TSB was fined £29.75 million by the FCA and £18.9 million by the PRA. 

The bank agreed to resolve this matter with the FCA and PRA qualifying it for a 30 per cent discount in the overall penalty imposed by both regulators. Without this discount, the FCA and PRA would have imposed a combined financial penalty of £69.5 million.

(Editor's note: While not strictly a wealth management story - TSB Bank is a retail UK business - the IT problems and impact on consumers are sobering reminders of how firms must handle upgrades carefully, given how many people can be affected.)