On Monday April 23, as TSB’s multi-week IT meltdown began, Lloyds Banking Group offered its assistance – but TSB declined, even as it became apparent that up to 1.9 million customers could no longer access their accounts.
This new information comes from the Financial Times, which spoke to two people with knowledge of the conversation between TSB and Lloyds.
TSB was part of the Lloyds Banking Group from 1999 until it was spun off as a separate bank in 2013. In 2015 TSB was acquired by Spanish banking group Banco Sabadell. TSB paid Lloyds to use its IT systems from 2013 until April 20, when it switched over to a new system created by Sabadell. The switchover itself, which involved migrating 1.3 billion records to the new system, was successful – but the new system couldn’t cope with the volume of users trying to log in.
For more than a week, up to 1.9 million TSB customers couldn’t access their bank accounts. Today, four weeks after the incident, some customers are still reporting issues. TSB has promised that all overdraft charges and interest fees will be waived, and you can claim compensation from TSB for any other losses that you might’ve suffered.
According to the FT’s sources, Lloyds offered help “hours” after TSB’s tech issues became apparent. TSB rejected the offer – but a few days later, on April 25, it announced that a team from IBM would be coming to its aid instead.
Labour MP John Mann, who sits on the Treasury select committee, told the FT that TSB had failed to grasp the significance of the issues and was “hoping to get away with it.”
“They were playing fast and loose with the customers and also with their reputation, which has been so damaged by it now,” he said.
TSB chief Paul Pester told the Treasury select committee that it had been a “terrible decision” to move ahead with the IT system migration. Pester voluntarily gave up a £2 million bonus that was linked to the switchover, but he could still receive up to £2.6 million this year in basic pay, benefits, pension contributions, and other bonuses.
TSB has set aside £50 million to deal with the fallout from the IT failure, and has asked Deloitte to devise a customer compensation plan. TSB has also hired Slaughter and May to lead an independent investigation into the outage.
Now find out how to switch current accounts
Image credit: Peter Macdiarmid / Staff