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TSB suffers 10,000 fraud incidents since IT meltdown - business live TSB says 1,300 people lost money through fraud since IT meltdown - business live
(35 minutes later)
Question: The FCA reminded TSB that communications should be fair and not misleading. Do you accept you misled customers and the committee.
Pester says he does not accept he misled committee. The FCA did ask TSB to change and improve communications on 25 April. We did that a day later, and then the FCA said our communications were excellent.
Question: Bailey wrote on 30 May and said the TSB’s use of figures risked giving too positive a view. Do you accept he feels you have not been frank?
Pester says Bailey also said there is no reason to believe TSB has made misleading statements and I apologise if you think.
Question: This is your MO, you’re saying its not that bad. This infuriates everyone, people feel they are being misled.
Pester says this is not my intent. I’m apologetic if you feel I’m trying to spin the information.
Question: Bailey says your quoting of averages is misleading.
Pester says he’s sorry if he appears to be unhelpful but he is telling the facts as he sees them.
Question: In how many cases since the migration, when there has been an investi of the customer being liable, has there been a delay in compensation.
Pester says we said we are not challenging or investigating customers as we created the uncertainty. To the best of my knowledge the answer is zero.
MPs are giving more examples of customers suffering problems.
Pester apologises if he gave the impression he was downplaying the seriousness of the problems facing the bank.
He also says he is sorry if the committee thinks he is not keeping his customers up to date.
Question: Either you knew about the scale of the issues with the fraud line [at the time of the previous committee session] and you didn’t tell us or you didn’t know there was a serious problem with fraud line.
Pester says I told you the information I had at the time.
Question: Banks should refund by the end of the following day when there is fraud. Has TSB done that?
Pester admits TSB has not done that.
Morgan talks about a self employed printer who wanted to access his money. He talks to TSB, gets another call from a mobile, is advised to talk to the person on the mobile. Then he thinks he’s been defrauded, finds £24,550 been taken from his account and TSB say he does not know how long it will be to get his money back. He has problems contacting TSB, finally gets his money back, changes account.
Then he gets a letter, saying TSB is not at fault, and it offered £192. Is that a fair outcome.
Pester says the details are distressing and I apologise. We will of course look at this case, and address them. He was caught up in that attack, I would like to take his case further.
Chairman Richard Meddings also apologies, says its difficult to comment on whether the payments are sufficient. They don’t necessarily seem to be a correct calculation, but we are attempting to set a framework of compensations taking into account stress and consequential loss.
Morgan says the more important point, and where TSB is tone deaf, where the letter suggests customer has to prove the point.
Meddings says, I get your point. When fraudsters raid accounts, banks can says customers are negligent but we are trying to compensate in full without asking about liability.
Morgan says during last hearing, the TSB twitter account said fraud lines were experiencing higher than usual levels. If twitter knew that why didn’t you?
Pester apologies (again!) and says the number he gave in good faith was the number he had at the time.
Morgan says does TSB deserve nickname of Terribly Shambolic Bank?
Pester says this whole situation has been a terrible situation for TSB customers. All I can do is work hard to fix this situation.
Morgan says Pester had said in a letter yesterday that between 23 April to 31 May, some 2,200 TSB customers had experienced attempts to access their accounts and 1300 suffered financial loss. But the FCA mentioned 10,000 incidents. For some customers this is not happening once but several times. Isn’t it typical that every time TSB is asked, you try to be clever with the numbers.
Pester says he’s sorry if that seems to be the case. The FCA number refers to alerts on accounts, pointing out unusual transaction patterns, which trigger text messages to see if they are genuine. If we don’t hear we block the accounts until we are able to speak to the customer.
The 2,200 number is number of customers who had attempts to defraud.
Morgan says how many fraud incidents where people had money taken out of their accounts were there?
Pester says 1300 had money taken out of their account by fraudsters, and we have refunded them.
Morgan points out Pester said at the last hearing that people were waiting only three minutes on the fraud line.Morgan points out Pester said at the last hearing that people were waiting only three minutes on the fraud line.
Pester says at the last meeting we had not been subject to fraud attacks at that level, it started on the first bank holiday in May, peaked on 15 May, then came under control since. At first meeting we were not subject to those levels of attack.Pester says at the last meeting we had not been subject to fraud attacks at that level, it started on the first bank holiday in May, peaked on 15 May, then came under control since. At first meeting we were not subject to those levels of attack.
That was the true statement of the situation at the time.That was the true statement of the situation at the time.
I am sorry if I appear to have been unforthright in evidence.I am sorry if I appear to have been unforthright in evidence.
Pester says the system tracking fraud still blocks accounts if it detects unusual patterns etc, so there are other ways than just customer reporting fraud.Pester says the system tracking fraud still blocks accounts if it detects unusual patterns etc, so there are other ways than just customer reporting fraud.
Morgan says fraud system hasn’t been working properly though.Morgan says fraud system hasn’t been working properly though.
Pester says the volume of attacks were 70 times the normal level of attacks. That overwhelmed TSB. So we put in a dedicated line.Pester says the volume of attacks were 70 times the normal level of attacks. That overwhelmed TSB. So we put in a dedicated line.
Fraud is a terrible experience. That fraud line has a two to three minute wait time. I apologise profusely to those customers who have suffered fraud.Fraud is a terrible experience. That fraud line has a two to three minute wait time. I apologise profusely to those customers who have suffered fraud.
Pester says it is still the same team, but we recruited more partners so we could respond more quickly.Pester says it is still the same team, but we recruited more partners so we could respond more quickly.
Morgan asks how long people have waited over recent weeks.Morgan asks how long people have waited over recent weeks.
Pester says it is a priority line so it is a matter of minutes. We have tightened up our fraud defences, and now volume is two or three times normal level.Pester says it is a priority line so it is a matter of minutes. We have tightened up our fraud defences, and now volume is two or three times normal level.
Morgan says people are talking about waiting for hours.Morgan says people are talking about waiting for hours.
Pester says that was before the new line. He apologises again and says it was unacceptable. The level of fraud was unprecedented.Pester says that was before the new line. He apologises again and says it was unacceptable. The level of fraud was unprecedented.
But Morgan says in your planning you anticipated an increase in fraudulent activity, so it wasn’t unprecedented.But Morgan says in your planning you anticipated an increase in fraudulent activity, so it wasn’t unprecedented.
Pester says sadly yes, we had our teams on high intensity when we migrated but it was higher than expected.Pester says sadly yes, we had our teams on high intensity when we migrated but it was higher than expected.
I have been shocked to read of customers waiting five, seven, nine hours. When I saw that I said we had to fix this. Putting a new line in was very important.I have been shocked to read of customers waiting five, seven, nine hours. When I saw that I said we had to fix this. Putting a new line in was very important.
Now TSB are up and Nicky Morgan begins with the issue of fraud.Now TSB are up and Nicky Morgan begins with the issue of fraud.
Question: Have conditions create a spate of fraudulent activity?Question: Have conditions create a spate of fraudulent activity?
Pester says he regrets but the situation gave an opportunity for fraudsters to target customers.Pester says he regrets but the situation gave an opportunity for fraudsters to target customers.
Morgan says they have to phone a dedicated fraud line, and is the route to get compensation.Morgan says they have to phone a dedicated fraud line, and is the route to get compensation.
Pester agrees but they says customers can report fraud to branches or online, but there is a dedicated line.Pester agrees but they says customers can report fraud to branches or online, but there is a dedicated line.
Ultimately though it all ends up with fraud team.Ultimately though it all ends up with fraud team.
The FCA session ends on that note.The FCA session ends on that note.
John Mann ask who should be held to account?John Mann ask who should be held to account?
Bailey says that’s the purpose of the investigation. But at the moment the most important thing is to dig out of hole.Bailey says that’s the purpose of the investigation. But at the moment the most important thing is to dig out of hole.
Mann says will you use the full range of your powers?Mann says will you use the full range of your powers?
Bailey says we will use the powers.Bailey says we will use the powers.
Question: The last IT meltdown was Co-op. How many other banks are at similar risks with antiquated IT systems?Question: The last IT meltdown was Co-op. How many other banks are at similar risks with antiquated IT systems?
Bailey says there are major IT changes going on most weekends in the banking systems. This year in particular there has been ringfencing.Bailey says there are major IT changes going on most weekends in the banking systems. This year in particular there has been ringfencing.
In this case it was a complete replatforming, from the Lloyds sytems to a new one.In this case it was a complete replatforming, from the Lloyds sytems to a new one.
Most institutions are operating on systems which have evolved over years.Most institutions are operating on systems which have evolved over years.
[In terms of risk for other banks] Bailey says he hopes not but you never know.[In terms of risk for other banks] Bailey says he hopes not but you never know.
There is a lot still to learn about this one, he says. What would it take for us to observe this in a way TSB management did not, what level of intrusion would be needed?There is a lot still to learn about this one, he says. What would it take for us to observe this in a way TSB management did not, what level of intrusion would be needed?
We were involved in the Visa incident, that was a hardware failure. We seek to learn but can’t give an assurance these things will never happen again.We were involved in the Visa incident, that was a hardware failure. We seek to learn but can’t give an assurance these things will never happen again.
Question: Will you set out what minimum compensation should be?Question: Will you set out what minimum compensation should be?
Bailey says we will want to see how they set it up and calibrate it. There should be a minimum standard below which compensation applies. Services have not been affected evenly, this is one of the problems.Bailey says we will want to see how they set it up and calibrate it. There should be a minimum standard below which compensation applies. Services have not been affected evenly, this is one of the problems.
Bailey is told the FCA should set down the law otherwise people will not have confidence, especially given the problems small businesses have faced with banks, especially GRG.Bailey is told the FCA should set down the law otherwise people will not have confidence, especially given the problems small businesses have faced with banks, especially GRG.
Bailey says he hopes they appreciate how much the FCA has been involved with TSB. He says the FCA put a team on site very quickly.Bailey says he hopes they appreciate how much the FCA has been involved with TSB. He says the FCA put a team on site very quickly.
Question: TSB have appointed Deloitte to look at compensation, how is it going?Question: TSB have appointed Deloitte to look at compensation, how is it going?
Bailey says we are pleased they have brought in outside resources, they have been overwhelmed. They are taking it seriously but we want to see it up and running.Bailey says we are pleased they have brought in outside resources, they have been overwhelmed. They are taking it seriously but we want to see it up and running.
Howard says they are recruiting staff to deal with compensation. They have started to resolve and settle complaints.Howard says they are recruiting staff to deal with compensation. They have started to resolve and settle complaints.
Bailey says this should happen quite quickly, it is not very complex. The timeline is short in terms of when things went wrong.Bailey says this should happen quite quickly, it is not very complex. The timeline is short in terms of when things went wrong.
Question: In some cases when customers asked to switch, bank has written to some of their direct debit accounts saying they had died, are you aware of this?Question: In some cases when customers asked to switch, bank has written to some of their direct debit accounts saying they had died, are you aware of this?
Bailey says that is another example of putting in a fix in to solve a problem and another part sends out a letter. Don’t think they did that intentionally.Bailey says that is another example of putting in a fix in to solve a problem and another part sends out a letter. Don’t think they did that intentionally.
Question: Does it undermine the system if people see this happening and are reluctant to switch.Question: Does it undermine the system if people see this happening and are reluctant to switch.
Bailey says longer term we will have to see the level of switching and if it is happening effectively.Bailey says longer term we will have to see the level of switching and if it is happening effectively.
Question: are you confident no other banks do this?Question: are you confident no other banks do this?
Bailey says I think we would know that.Bailey says I think we would know that.
Sutherland says it’s a TSB issue.Sutherland says it’s a TSB issue.
Question: Who controlled the timing of migration of IT systems {TSB or parent company?]Question: Who controlled the timing of migration of IT systems {TSB or parent company?]
Bailey says that will be a major part of the investigation. It was utilising [parent company] Sabadell’s platform but the responsibility rests with TSB managment...Bailey says that will be a major part of the investigation. It was utilising [parent company] Sabadell’s platform but the responsibility rests with TSB managment...
But this can’t descend into finger pointing [between TSB and Sabadell]But this can’t descend into finger pointing [between TSB and Sabadell]
On the question of accountability, Bailey says in this case there is a relationship with an outsourcer (in this case part of the parent company). You can’t outsource responsibility, and it rests with the management of the TSB.On the question of accountability, Bailey says in this case there is a relationship with an outsourcer (in this case part of the parent company). You can’t outsource responsibility, and it rests with the management of the TSB.
Question: have TSB now got it right?Question: have TSB now got it right?
Bailey says they have improved considerably. The days of the rather generalised and rosy statements, we haven’t seen them so often. But it is still important, there are a lot of things going wrong in branches, quite basis and important things. These things still need fixing and it will take time.Bailey says they have improved considerably. The days of the rather generalised and rosy statements, we haven’t seen them so often. But it is still important, there are a lot of things going wrong in branches, quite basis and important things. These things still need fixing and it will take time.