The boss of TSB has issued a grovelling apology to customers as he was lambasted by MPs for locking nearly 2million people out of their accounts.
Around 1.9 million people using TSB’s digital and mobile banking found themselves blocked from their own money during the bank’s botched move to a new system in April.
The IT meltdown led to 10,600 fraud attempts on around 2,200 customers, the Commons’ Treasury Committee heard today. More than 1,000 people lost money.
In a major gaffe, organisations with which customers had direct debits were told the person was dead in around 370 cases, bosses admitted.
The bank’s chief executive Paul Pester admitted the bank was ‘overwhelmed’ today and apologised to customers.
TSB chief executive Paul Pester today apologised to customers for his company’s IT meltdown
Dr Pester said: ‘We saw a 70 times uplift in cases reported. I obviously apologise profusely for this.’
He said: ‘The 10,000 number (is) alerts that we generated… 1,300 people had money taken out of their account by fraudsters.’
Asked if he was trying to make the fraud numbers appear more insignificant, Mr Pester said: ‘I’m deeply apologetic if you believe that I am in some way trying to spin the information.’
Dr Pester, who made a string of apologies throughout the hearing, was asked if he should take responsibility for many committee members feeling the way he had communicated to them was misleading.
He said: ‘I’m deeply sorry if you feel I have misled the committee. There is nothing that I’ve said that has not been said in good faith.
‘Everything I have said to you I have said in good faith. Everything I have said to you I believe to be full and complete. And every piece of information I’ve provided to you is the best information I’ve had available at the time.’
The committee heard the bank has seen around 12,500 customers since the computer meltdown.
Labour MP Wes Streeting asked Dr Pester: ‘You’ve set a record for the number of apologies to a parliamentary select committee… but how can your customers possibly have confidence in your ability to turn this around?’
Dr Pester replied: ‘No one is more committed to turning this around than me.’
Dr Pester, pictured in 2013, apologised for appearing like he was ‘spinning’ figures
Andrew Bailey, the head of the Financial Conduct Authority, which has announced it is investigating the IT migration, earlier told the committee that there were ‘frank conversations’ with TSB about the way it communicated information about the meltdown.
Mr Bailey said: ‘A more straightforward recognition of what the situation was would have been helpful.’
Asked about levels of fraud, Mr Bailey told the committee: ‘We think there’s been something, I think it’s around about just over 10,000, 10,600 incidents and that has resulted in a level of payout.’
Ahead of the hearing, Mrs Morgan said she was ‘deeply concerned’ about TSB’s communication around the problems.
FCA chief executive Andrew Bailey said in a letter to Treasury Committee chairwoman Nicky Morgan that the regulator would carry out a joint investigation with the Prudential Regulation Authority.
He also slammed the bank for not being ‘open and transparent’ and said its ‘poor communications’ could harm trust in the sector.
Nicky Morgan, chair of the Treasury committee, asked Dr Pester why he previously said customers were only waiting three minutes on a helpline when some waiting up to nine hours
Mr Bailey 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.’
He added: ‘We do not normally make this information public, but, given the level of public interest, I want to be clear that we will be conducting this work.’
The FCA also described TSB chief executive Paul Pester’s evidence to the Treasury Committee last month as ‘optimistic’ and said ‘greater caution would have made sense’.
Mr Bailey said Dr Pester could have shared ‘more detail with the committee’, including the initial views of a team of experts from IBM who were drafted in to help solve the crisis.
Last month, Dr Pester told MPs on the Treasury Committee that he took ‘absolute responsibility’ for the problems, but said the migration of billions of customer records was successful ‘to the penny’ and the underlying engine of the bank was ‘working well’.
In his May 30 letter responding to Mrs Morgan’s request for information, FCA chief executive Mr Bailey wrote: ‘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,’ adding that the bank’s response ‘could reduce trust in TSB and in the banking sector as a whole’.
Financial Conduct Authority boss Andrew Bailey, pictured, criticised TSB over its poor communications when an IT failure left 1.9million customers locked out of their accounts in April
He also said TSB had not met regulations to refund all relevant customers as soon as practicable or by the end of the business day after the day which it became aware of the fraud.
Mrs Morgan 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.
‘The committee will discuss Mr Bailey’s letter, and the ongoing problems faced by TSB customers, when it sees Dr Pester and other TSB board members, as well as the FCA, on Wednesday.’
Mr Bailey’s letter also revealed that at the time of writing, more than 40 per cent of calls to TSB were still abandoned or disconnected before progressing through the IVR (interactive voice recognition system) and wait times to speak to an agent had at times been longer than 30 minutes.
Who is TSB boss Paul Pester?
Paul Pester, who lives in Norfolk with his wife and two sons, was paid £1.8million last year.
The 54-year-old likes to cast himself as a different sort of boss who wants to build a better banking industry.
He worked for Lloyds before overseeing its spin-off of TSB in 2013, then took the top job at the new bank and has since cultivated an image as the white knight of finance, attacking everything from unfair overdraft fees to irresponsible lending.
Bank chief: TSB boss Paul Pester, 54, was paid £1.8million last year
Mr Pester is a keen runner who challenged employees to a ‘beat the boss’ competition for charity at last year’s London triathlon.
The father of two also enjoys surfing and has been travelling to Fistral beach in Newquay, Cornwall to ride the waves since the age of six.
Action man: He takes part in running and swimming challenges
He once described getting on the water as ‘a real level of escape’, saying the sea ‘feels more like a natural habitat’.
Mr Pester was born in Plymouth to a swimming instructor father who once coached Olympic medallist Sharron Davies.
He obtained a mathematical physics doctorate from Oxford University before working as a consultant with firms including McKinsey.
His big break came in 1999 when he was made head of Virgin Money, before working for Lloyds and Moneyfacts. A short stint followed at Santander before he returned to Lloyds in 2010.