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TSB says 1,300 people lost money through fraud since IT meltdown - business live TSB says 1,300 people lost money through fraud since IT meltdown - business live
(35 minutes later)
Morgan says some of the fraud is done with sim cards so is TSB in contact with the mobile companies?
Pester says yes they have been.
Morgan says there are people trying to call the fraud line and have waited 15 minutes and 27 minutes and given up.
She asks when the Slaughter and May report will be published.
Meddings says there is no date but they have started work. He says he hopes it’s several weeks, not longer than that. But not before the summer holidays. They haven’t given me a deadline date.
Montes is asked if Sabadell should be paid by TSB for this failure?
He says, we are quite conscious about the damage to TSB customers. We know most of it came from bad functioning of the system after migration. We have committed resources to work to a solution. There have not been any kind of discussions about payments,. There won’t be until the solution is finished.
Question: who was really in charge here during this process?
Pester: The responsibility and decision was with the TSB board.
Question: Was the timing, decision making, risk management controlled by TSB?
Pester: Ultimately yes although we used a range of suppliers to opine whether we were in a position to migrate.
Question: clerks here found a forum with customers complaining of receiving letters for other people. Why are you not prepared to make sure your customers are not being defrauded?
Pester says he has acknowledged TSB has sent multiple letters in the same envelope. Again he apologises.
Question: how many customers have left the bank?
Pester: 12,500 customers have switched away, but I do not know causes.
Question: how many staff have you recruited?
Pester: 2,200
Question: are you paying them full overtime?
Pester: yes, we are paying twice normal rate for overtime.
Question: so why weren’t they adequately resourced in the first place?
Pester: we did increase resource before migration, but we didn’t expect this level of problems. We would never have done the migration if we had known we would have these issues.
Question: Payments to Sabadell for migration were delayed until completion. Why?
Pester: To account for any cost overruns.
Question: will the payments be made?
Pester: it will depend on the report into what happened.
On compensation, Pester says if people are not happy they can come back to us.
He says it is easy to register a complaint.
But Pester is accused of not taking on board how serious some of these problems (eg the ruined wedding) are.
Question: can you give a guarantee on a minimum amount?
Pester says he will write to the committee with the figures.
Pester is asked about TSB’s profits which he says are around £200m.
He says money should not be an object for resources.
Question: and should not be an object for compensation?
Pester says of course not.
Question: how much have you employed for resources and compensation?
Pester says we have no set amount.
Meddings says we will set an appropriate compensation framework.
To date bank has cancelled charges worth £29m. Have compensated people for fraud of £11.2m, and backlog means it is probably £20m year to date.
Incremental resources, overtime and people, IBM etc, about another £20m.
Montes says the figures are consolidated into Sabadell accounts.
Question. You have dealt with 24,094 complaints out of 95,063. This is not a significant number. Should you be adding more resources to address this problem?
Pester says we have added 466 extra complaints handlers, over the last week.
We dealt with the 24,000 before this, our aspiration is to close this down as quickly as possible. Every complaint we attempt to deal with within eight weeks of receiving it.
Question: are you prepared to put in extra staff?
Meddings says absolutely yes. We are adding resource as fast as it is possible to do. We have taken more people into branches and call centres, they have to be trained so we are bringing on resources and will continue to do so.
Question: the compensation figures are extraordinarily small. Will anyone who is forced out get golden parachutes?
Meddings says we will look at conclusions, take necessary action. It will depend on outcome and nature of the fault.
If they are found to have been grossly negligent that will be taken into account in the terms of their departure.
Question about the letters written by TSB to direct debit companies when customers wanted to switch, saying customers had died.Question about the letters written by TSB to direct debit companies when customers wanted to switch, saying customers had died.
Pester says there were 370 people affected and caused by an error in the software.Pester says there were 370 people affected and caused by an error in the software.
Pester says they are speaking to the customers’ new banks to contact customers and offer them compensation.Pester says they are speaking to the customers’ new banks to contact customers and offer them compensation.
Pester says they are correcting the error with the direct debit companies.Pester says they are correcting the error with the direct debit companies.
Morgan says you talk about things being resolved but they may not be resolved to the satisfaction of the customers.Morgan says you talk about things being resolved but they may not be resolved to the satisfaction of the customers.
Mann says you are in breach of data protection law, you are paying pitiful levels of compensation which I find deeply disturbing, you pay yourselves massive amounts of money. Can we be certain some heads are going to roll?Mann says you are in breach of data protection law, you are paying pitiful levels of compensation which I find deeply disturbing, you pay yourselves massive amounts of money. Can we be certain some heads are going to roll?
Meddings says it would be wrong to prejudge. But depending on what investigation we will take action.Meddings says it would be wrong to prejudge. But depending on what investigation we will take action.
Mann asks them - especially Pester - if they will fall on their swords before they are pushed.Mann asks them - especially Pester - if they will fall on their swords before they are pushed.
Pester says his focus is on fixing this for customers, I am passionate about TSB, I don’t think anyone else will be as committed as me, when we get to end of this procedure we will see.Pester says his focus is on fixing this for customers, I am passionate about TSB, I don’t think anyone else will be as committed as me, when we get to end of this procedure we will see.
Mann says where is the leadership?Mann says where is the leadership?
Meddings says senior seats carry responsibility and we have chosen these seats. It’s important to establish what went wrong and where there is culpability we will act on it.Meddings says senior seats carry responsibility and we have chosen these seats. It’s important to establish what went wrong and where there is culpability we will act on it.
Mann asks how many heads will roll?Mann asks how many heads will roll?
Meddings says it is important not to prejudge. Slaughter and May are conducting an independent review, we will publish it and take action on the basis of its findings.Meddings says it is important not to prejudge. Slaughter and May are conducting an independent review, we will publish it and take action on the basis of its findings.
If I am found to be culpable then the actions will attach to me.If I am found to be culpable then the actions will attach to me.
John Mann asks how could one of his constituents receive someone else’s details.John Mann asks how could one of his constituents receive someone else’s details.
Pester says he apologies. I don’t know how it happened, I don’t know the circumstances. It’s not something we do intentionally.Pester says he apologies. I don’t know how it happened, I don’t know the circumstances. It’s not something we do intentionally.
Mann asks Meddings the same question.Mann asks Meddings the same question.
Meddings says I can’t answer without knowing details.Meddings says I can’t answer without knowing details.
Mann asks if this an ongong problem.Mann asks if this an ongong problem.
Pester said he is not aware of it.Pester said he is not aware of it.
Mann says his constituent wrote to TSB and heard nothing back. You’re saying you’re not aware and that’s astonishing. I’m struggling that you’re even aware of the problem.Mann says his constituent wrote to TSB and heard nothing back. You’re saying you’re not aware and that’s astonishing. I’m struggling that you’re even aware of the problem.
Mann asks about a constituent whose wedding was ruined and how much she received.Mann asks about a constituent whose wedding was ruined and how much she received.
Meddings says she has been compensated but can’t say how much. But it would compensate for distress.Meddings says she has been compensated but can’t say how much. But it would compensate for distress.
Mann says it’s £100.Mann says it’s £100.
[Silence][Silence]
Medding says he apologises.Medding says he apologises.
Mann says its £1 per apology in this session.Mann says its £1 per apology in this session.
Mann now asks why Sabadell chief operating officer Miguel Montes is still in his job.Mann now asks why Sabadell chief operating officer Miguel Montes is still in his job.
Montes also apologies, and admits not all problems have been solved.Montes also apologies, and admits not all problems have been solved.
Mann asks how embarrassed is he that his bank’s reputation has been sullied by people who don’t know how people received other people’s details.Mann asks how embarrassed is he that his bank’s reputation has been sullied by people who don’t know how people received other people’s details.
Montes says, we are very embarrassed.Montes says, we are very embarrassed.
Mann: How embarrassed are you about the level of compensation for someone who’s wedding has been ruined?Mann: How embarrassed are you about the level of compensation for someone who’s wedding has been ruined?
Montes: I have no competence to answer this question.Montes: I have no competence to answer this question.
Mann: Do you have confidence in working with people who don’t bother compensating someone when it’s raised in parliamentary committee. Is that good for your brand reputation.Mann: Do you have confidence in working with people who don’t bother compensating someone when it’s raised in parliamentary committee. Is that good for your brand reputation.
Montes: our brand reputation has been damaged. We have worked night and day, we have progress but not enough. Paul and his team have been clear we will do whatever it takes to compensate customers.Montes: our brand reputation has been damaged. We have worked night and day, we have progress but not enough. Paul and his team have been clear we will do whatever it takes to compensate customers.
Mann says Meddings reputation is on the line as well. How long will this take?Mann says Meddings reputation is on the line as well. How long will this take?
Meddings says, we are working vigilantly. We are digging ourselves out of a hole. We have challenges with the call lines, and occasionally in the branches.Meddings says, we are working vigilantly. We are digging ourselves out of a hole. We have challenges with the call lines, and occasionally in the branches.
Mann says the branches are bailing you out, and you have put the call centre staff in a difficult situation.Mann says the branches are bailing you out, and you have put the call centre staff in a difficult situation.
Meddings thanks the bank’s staff for having to deal with the situation.Meddings thanks the bank’s staff for having to deal with the situation.
Question: The FCA has never written such a letter. Do you accept you should take more personal responsibility.
Pester says, I am taking complete and utter responsibility.. All I can do is focus on fixing the situation.
Question: Many on the committee believe you have misled the committee.
Pesters says, I’m sorry if you feel that, I have given the best information I had.
Morgan says in a letter on 25 April you wrote everything it running smoothly for vast majority of customers. FCA said this was an example of poor communication. Do you regret that phrase?
Pester apologies if he misled anyone. The use of that phrase was to show credit card, debit payments [etc] key parts were working well but we had serious problems with customer access.
He says we have tried to communicate as well as we can.
Question about whether Pester made confusing statement about IBM’s role. Are IBM doing a full review or are they there just to help the situation?
Pestere says they are there to help us fix problems, then perform a review to help us understand how this could have occurred. I apologise for my loose use of wording.
Question: this is not the only loose use of wording. You said it was middlewear but it was more than this and you seem to know this from the IBM slides.
Pester said the IBM findings are early findings and observations and say most of the problems are related to the applications, middleware and network ather than the underlying infrastructure.
I tried to explain this in the first session.
[Pester is asked to hand over the slides and does so.]
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.
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.
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.
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.
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.
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.
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.
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.
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.