The UK Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have fined TSB Bank a total of £48,650,000 for operational risk management and governance failures. Technical failures in the bank’s IT system ultimately resulted in customers being unable to access banking services. TSB was fined £29,750,000 by the FCA and £18,900,000 by the PRA. TSB agreed to resolve this matter with the FCA and PRA qualifying it for a 30% discount in the overall penalty.
Without this discount, the FCA and PRA would have imposed a combined financial penalty of £69,500,000 (£42,500,0000 by the FCA and £27,000,000 by the PRA).
In April 2018, TSB updated its IT systems and migrated the data for its corporate and customer services on to a new IT platform (the “Migration Programme”). 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.
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 has paid £32.7m in redress to customers who suffered detriment.
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. Operational resilience is a priority, the FCA said in its statement.
