UK bank TSB hit with £48.65m fine over tech failure

UK financial regulators have handed a  £48.65m fine to TSB, an incumbent bank with millions of customers after IT failures lasting six months.

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) said operational risk management and governance failures occurred owing to the outsourcing of the technology upgrade.

TSB started updating its legacy infrastructure in April 2018 but a botched migration of both corporate and customer services to a new tech platform resulted in technical failures. 

“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,” the regulators said in a statement. 

TSB has already paid £32.7m to customers bringing the costs to over £80m. The figure equates to the entire sum of Monzo’s Series E investment which occurred in the same year (2018) at a valuation of £1bn. This has roughly tripled since. 

The regulators’ said TSB failed to “organise and control the IT migration programme adequately”  and that “operational risks arising from its IT outsourcing arrangements” were not correctly managed.

'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,” said Mark Steward, FCA Executive Director of Enforcement and Market Oversight.

'The firm failed to plan for the IT migration properly, the governance of the project was insufficiently robust and the firm failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.'

Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said:

'The PRA expects firms to manage their operational resilience as well as their financial resilience. The disruption to continuity of service experienced by TSB during its IT migration fell below the standard we expect banks to meet.'

The fine was split by £29.75m from the FCA and £18.9m by the PRA. This includes a 30 per cent discount that TSB qualified for as it agreed to resolve the matter with the FCA and PRA. Without the discount, the combined financial penalty would have been £69.5m.