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TSB boss faces fresh grilling from MPs over IT meltdown – business live TSB suffers 10,000 fraud incidents since IT meltdown - business live
(35 minutes later)
Question: where are we in timeline for having a coherent plan for the recovery of services?
Sutherland says there is a rolling fortnight forward plan for fixing faults in IT, but we haven’t seen a plan for getting back to where we were before migration.
Bailey says one of the reasons they brought IBM in was they didn’t have that plan, IBM are helping put that plan in.
Question: does TSB understand the problems, and have the root causes been found?
Bailey says the understanding of the problem has evolved over time. It is still evolving, I do not regard that as particularly negligent.
The rate of emerging faults is falling off, as you would expect.
It would be wrong to speculate [about our investigation] but testing will be one of the key questions. How robust and rigorous was it.
They have put a fix in, and something else happens elsewhere in the architecture, and messages are sent to customers which shouldn’t be. So that gets back to testing.
Question: when was FCA first told about the TSB problems?
Bailey says the first warning that the FCA got was on the Sunday evening, we were notified at one minute to nine o’clock.
They were going live at 6 o’clock, they first identified problems at 6.20.
We heard just before 9,. we had the first call just around midnight.
The FCA response was activated the next day.
Morgan says FCA says they had not met standard for repaying fraud, why was that?
Bailey says they were initially overwhelmed.
The FCA’s Sheree Howard says, they have now prioritised that.
Morgan says is there a pattern of TSB trying to argue the case before refunding.
The FCA says no.
Nicky Morgan, chair of the Treasury committee, says one in ten fraud-related calls being answered is not up to FCA standards, and the FCA agrees.
TSB set up a dedicated fraud line, with the idea that customers would be able to get through more quickly. People can use either line.
Sutherland said the fraud problem didn’t come up in the first ten days.
Bailey is asked about fraud but says he will be circumspect.
He says there have been around 10,600 incidents, which have resulted in a level of payout.
The FSA’s John Sutherland is talking about TSB being alerted to the prospect of fraud, which could lead to customers’ accounts been locked. These are still on an upward trend, as TSB is not resourcing themselves.
There is a huge variability between one in ten calls answered to practically all, depending on time of time. This has led to customers complaining about how long they have been waiting.
The TSB session has begun, with the Financial Conduct Authority underway.
Chief executive Andrew Bailey says they have had a full time presence at TSB for some time but they have scaled that back a little now.
A reminder. The parliamentary session on the TSB problems can be seen live here, due to start in less than ten minutes. First up is the Financial Conduct Authority’s chief executive Andrew Bailey and two of his colleagues. The FCA has issued a strong criticism of the performance of TSB and its chief executive Paul Pester over the IT fiasco.A reminder. The parliamentary session on the TSB problems can be seen live here, due to start in less than ten minutes. First up is the Financial Conduct Authority’s chief executive Andrew Bailey and two of his colleagues. The FCA has issued a strong criticism of the performance of TSB and its chief executive Paul Pester over the IT fiasco.
Meanwhile Pester and his team will be quizzed separately once the Treasury Committee is finished with the FCA.Meanwhile Pester and his team will be quizzed separately once the Treasury Committee is finished with the FCA.
TSB’s troubles shine a spotlight on the problems facing much of the banking sector, says professor Pinar Ozcan of Warwick Business School, that is, outdated technology:TSB’s troubles shine a spotlight on the problems facing much of the banking sector, says professor Pinar Ozcan of Warwick Business School, that is, outdated technology:
Many established banks’ complicated and siloed IT infrastructures, which were built in the 1970s, make it difficult for them to form a platform that would make sense of the data that is currently stored in a disorganised and non-standard way in separate databases.Many established banks’ complicated and siloed IT infrastructures, which were built in the 1970s, make it difficult for them to form a platform that would make sense of the data that is currently stored in a disorganised and non-standard way in separate databases.
Banks typically have vertically integrated pillars, which are all for different products and which don’t really talk to one another. That’s why, when you call your bank for something, they sometimes tell you, we’ve got great rates for a mortgage, and you say, ‘but I actually have a mortgage with you’!Banks typically have vertically integrated pillars, which are all for different products and which don’t really talk to one another. That’s why, when you call your bank for something, they sometimes tell you, we’ve got great rates for a mortgage, and you say, ‘but I actually have a mortgage with you’!
The recent troubles at TSB provide a great example of a nightmare scenario that can arise as banks update their legacy IT systems. And this is a chicken and egg problem in that in order to avoid security breaches like in the case of TSB, banks have been avoiding major overhauls of their systems, but of course, the more they stay in avoidance mode, the less they will be able to provide digital platforms that make sense of data and offer competitive services.The recent troubles at TSB provide a great example of a nightmare scenario that can arise as banks update their legacy IT systems. And this is a chicken and egg problem in that in order to avoid security breaches like in the case of TSB, banks have been avoiding major overhauls of their systems, but of course, the more they stay in avoidance mode, the less they will be able to provide digital platforms that make sense of data and offer competitive services.
The parliamentary session on TSB’s IT problems kicks off off in 30 minutes, so here’s a quick reminder/preamble.The parliamentary session on TSB’s IT problems kicks off off in 30 minutes, so here’s a quick reminder/preamble.
The Treasury committee is holding its second hearing into the TSB IT meltdown. MPs will demand answers about the problems that prevented millions of TSB customers from accessing their accounts in recent weeks - and which still aren’t fully fixed.The Treasury committee is holding its second hearing into the TSB IT meltdown. MPs will demand answers about the problems that prevented millions of TSB customers from accessing their accounts in recent weeks - and which still aren’t fully fixed.
MPs will hear from CEO Paul Pester at 3.30pm. Pester has been accused of complacency last month for not grasping the full extent of the disruption.MPs will hear from CEO Paul Pester at 3.30pm. Pester has been accused of complacency last month for not grasping the full extent of the disruption.
The Financial Conduct Authority has put more pressure on Pester. The FCA has told MPs suggesting that he was too optimistic about the situation and didn’t give MPs a proper account four weeks ago.The Financial Conduct Authority has put more pressure on Pester. The FCA has told MPs suggesting that he was too optimistic about the situation and didn’t give MPs a proper account four weeks ago.
The FCA’s chief executive, Andrew Bailey, will give his assessment of the situation at 2.30pmThe FCA’s chief executive, Andrew Bailey, will give his assessment of the situation at 2.30pm
Treasury committee chair Nicky Morgan has said she’s very concerned about the communication failures at TSB.Treasury committee chair Nicky Morgan has said she’s very concerned about the communication failures at TSB.
Labour shadow City minister Jonathan Reynolds has accused the bank of serious failings.Labour shadow City minister Jonathan Reynolds has accused the bank of serious failings.
Some TSB customers continue to report problems accessing services, and some are struggling to getting through to the bank to report problems.....Some TSB customers continue to report problems accessing services, and some are struggling to getting through to the bank to report problems.....
Thanks for coming back to us Raffaella. I'm glad this is being looked into for you. If you’d like to log a complaint you can log this by completing our online form https://t.co/rbfcgsFnJE. Please accept our apologies for any inconvenience caused. IanThanks for coming back to us Raffaella. I'm glad this is being looked into for you. If you’d like to log a complaint you can log this by completing our online form https://t.co/rbfcgsFnJE. Please accept our apologies for any inconvenience caused. Ian
I’m very sorry to read this, Linda. I can’t apologise enough for the difficulties your husband has had whilst trying to speak with our about this. We’re unable to access any account information through Twitter to investigate this for you, and your husband would 1/3 GrahamI’m very sorry to read this, Linda. I can’t apologise enough for the difficulties your husband has had whilst trying to speak with our about this. We’re unable to access any account information through Twitter to investigate this for you, and your husband would 1/3 Graham
After widespread condemnation, the boss of Qatar Airways has apologised for saying only a man could do his job because it’s such a tricky job.After widespread condemnation, the boss of Qatar Airways has apologised for saying only a man could do his job because it’s such a tricky job.
Akbar Al Baker has now backtracked, claiming he is committed to gender equality and blaming the media for ‘sensationalising’ his comments.Akbar Al Baker has now backtracked, claiming he is committed to gender equality and blaming the media for ‘sensationalising’ his comments.
Frankly I’m not sure they needed sensationalising. If you missed the story, Al Baker declared that:Frankly I’m not sure they needed sensationalising. If you missed the story, Al Baker declared that:
“Of course, it [Qatar Airways] has to be led by a man, because it is a very challenging position.”“Of course, it [Qatar Airways] has to be led by a man, because it is a very challenging position.”
More here.More here.
Qatar Airways CEO apologises for suggesting a woman could not do his job https://t.co/ZuT7qxc2VWQatar Airways CEO apologises for suggesting a woman could not do his job https://t.co/ZuT7qxc2VW
Peter Praet has also hit eurozone bonds.Peter Praet has also hit eurozone bonds.
Bond prices are down, sending yields (interest rates up), following Praet’s hint that the European Central Bank could decide to stop its asset-purchase programme soon.Bond prices are down, sending yields (interest rates up), following Praet’s hint that the European Central Bank could decide to stop its asset-purchase programme soon.
European bonds sell off, euro raises as #ECB policy makers flagged the prospect of talks to end its debt-buying program pic.twitter.com/hskHuJQjk0European bonds sell off, euro raises as #ECB policy makers flagged the prospect of talks to end its debt-buying program pic.twitter.com/hskHuJQjk0
Praet’s comments suggest the ECB isn’t panicking about the new populist government in Italy.Praet’s comments suggest the ECB isn’t panicking about the new populist government in Italy.
Kit Juckes of Societe Generale says:Kit Juckes of Societe Generale says:
Everyone in Europe seems to be in a terrific rush at the moment. Italian political developments continue at a rapid pace as the new Government flexes muscles and outlines it strategy.Everyone in Europe seems to be in a terrific rush at the moment. Italian political developments continue at a rapid pace as the new Government flexes muscles and outlines it strategy.
The ECB, widely assumed to be in ait-and-see mode, reluctant to rush towards policy normalisation until the BTP [Italian bond] market, at least, calms down, is also in too much of a hurry for such niceties.The ECB, widely assumed to be in ait-and-see mode, reluctant to rush towards policy normalisation until the BTP [Italian bond] market, at least, calms down, is also in too much of a hurry for such niceties.
Back in the markets, the euro is rallying after a senior policymaker hinted that the European Central Bank could wind down its bond-buying stimulus programme soon.Back in the markets, the euro is rallying after a senior policymaker hinted that the European Central Bank could wind down its bond-buying stimulus programme soon.
ECB chief economist Peter Praet told a conference in Berlin this morning that the governing council will debate whether to gradually unwind bond purchases at its meeting next week.ECB chief economist Peter Praet told a conference in Berlin this morning that the governing council will debate whether to gradually unwind bond purchases at its meeting next week.
Praet cited the (long-awaited) recovery in Europe’s labour market; the Eurozone unemployment rate fell to 8.5 percent in April, a 10-year low. That should push inflationary pressures higher, and give the ECB confidence to rein in its money-printing scheme.Praet cited the (long-awaited) recovery in Europe’s labour market; the Eurozone unemployment rate fell to 8.5 percent in April, a 10-year low. That should push inflationary pressures higher, and give the ECB confidence to rein in its money-printing scheme.
The ECB’s is currently committed to buying €30bn of eurozone government bonds each month with newly created money, until at least September. Praet’s comments suggest that the ECB will discuss ending QE in three months, although a final decision might not come until July’s meeting.The ECB’s is currently committed to buying €30bn of eurozone government bonds each month with newly created money, until at least September. Praet’s comments suggest that the ECB will discuss ending QE in three months, although a final decision might not come until July’s meeting.
The euro has jumped by half a cent against the US dollar to $1.177, a two-week high.The euro has jumped by half a cent against the US dollar to $1.177, a two-week high.
#euro, #ECB: EUR/USD is bouncing on Peter Praet's hawkish comments that labour market tigthness is translating into stronger pick-up in wage growth. A sign that ECB is going to see through Italy. This should keep a floor under EUR/USD while pressure on BTPs is set to stay. pic.twitter.com/94Uq4ENnoa#euro, #ECB: EUR/USD is bouncing on Peter Praet's hawkish comments that labour market tigthness is translating into stronger pick-up in wage growth. A sign that ECB is going to see through Italy. This should keep a floor under EUR/USD while pressure on BTPs is set to stay. pic.twitter.com/94Uq4ENnoa
The Labour party have added their voice to the chorus of criticism of TSB.
Jonathan Reynolds MP, Labour’s Shadow City Minister, says:
“It is deeply worrying that one month on from these issues, some TSB customers are still having difficulties. Labour echo the concerns of the FCA that communications have simply not been good enough.
“There has plainly been a serious failure here, both in contingency preparations for a meltdown and in assuring an adequate level of customer communication.”
TSB’s problems worsened last week when the bank sent letters of apology to the wrong customers.
Some of the letters included other people’s names, addresses and customer reference numbers. That means they could breach Britain’s new data privacy laws, the General Data Protection Regulation.
Andy Barratt, UK managing director of cyber security consultancy Coalfire, thinks TSB could be fined by the Information Commissioner for the breach. The ICO was also concerned that hundreds of TSB customers saw the wrong account details in the hours after April’s migration.
Barratt explains:
“The apology letter glitch is the latest development in this ongoing TSB saga. MPs are clearly taking this issue seriously but, crucially, we’re yet to see the ICO weigh in following its own investigations. The regulator will be particularly concerned that ‘data breaches’ of this magnitude have now happened more than once – both immediately before and then again after the implementation of GDPR.
“The power to hand out major fines that GDPR affords the regulator means that the price of poor data protection is about to become far easier to quantify.
TSB customers are still reporting problems accessing their accounts to the bank’s social media unit, six weeks after the IT problems began.
Many are saying they can’t get through to TSB’s telephone helplines....
I'm really sorry for this Chelsie. Our Telephone Banking team are currently experiencing a higher volume of calls than usual, have you now been able to speak to someone regarding this? Sophie
I'm really sorry Mark. Unfortunately we're unable to arrange for someone to call you, I'm sorry for nay inconvenience caused. Please rest assured they'll answer as soon as possible. Sophie
Others report that they can’t see their accounts online, or make certain payments.
Hello Andy. We are sorry to read that. Thanks for contacting us. We have looked into this for you and your accounts are being reflected accurately in our systems. However, we currently have a problem with displaying the information online and through the mobile app. 1/2 Ese
Any idea when it will be up and running, I need to transfer asap for a mortgage payment before i get another late payment! pic.twitter.com/LDKbDvGjuy
The Financial Conduct Authority appears to have put Paul Pester in a real spot, by accusing him of being too optimistic about the state of TSB’s tech problems.
If the Treasury committee feel Pester wasn’t straight with them last month, they could put him under serious pressure. Pester has already given up one bonus - for completing the IT migration. Could his job be at risk?
The Times’s banking editor, Katherine Griffiths, suggests TSB may needed to be rebranded as Sabadell (the Spanish company which bought TSB in 2015).
But Pester might not oversee such a change, if he finds himself “up against the wall” over his handling of the crisis, she adds.
Technology failure puts TSB boss in crosshairs of trigger-happy MPs - today's @KGriffithsTimes column https://t.co/uTjnRnl37l via @TimesBusiness pic.twitter.com/USZpXwzwsy
The BBC’s Kevin Peachey agrees that the FCA’s public criticism of a serving bank boss is pretty rare:
TSB's optimism problem - this kind of criticism of a bank boss from the regulator is very unusual #TSB https://t.co/Zixc9jefg4
MoneySavingExpert have put together a few questions for Paul Pester to answer at today’s hearing:
The Treasury committee’s first hearing into the TSB crisis, last month, was a very bruising experience.
MPs lost patience with the bank as Paul Pester repeatedly argued that much of the IT migration had gone well (even if customers couldn’t actually access their accounts).
Nicky Morgan eventually let rip, telling Pester he was a “staggering example of a chief executive who seems unwilling to acknowledge the scale of the problem”.
Here’s a clip from the May 2nd hearing:
TSB is still suffering problems, more than six weeks after the ill-fated migration from its former owner Lloyds to its current owned Sabadell.
The bank’s service status page warns that some customers are still having issues logging into internet banking, or having difficulties making payments. Also, some Direct Debit payments weren’t taken for TSB credit card customers this month.
TSB also admits that some customers calling Telephone Banking are experiencing long wait times, and that its branches are busier than usual too.
Nicky Morgan MP, the chair of the Treasury Committee, has piled more pressure on Paul Pester ahead of this afternoon’s interrogation.
Morgan says she is “deeply concerned by TSB’s poor communications” over its IT problems.
Last week, the Financial Conduct Authority told the Committee it is ‘dissatisfied’ with TSB’s communications with its customers.
For example, FCA chief Andrew Bailey says that TSB claimed that “the vast majority” of customers could access their online account, when in reality only 50% could successfully log in the first time they tried.
That’s one reason Bailey is accusing Pester of giving an “optimistic” view of the situation when he faced MPs last month, rather than a “more rounded view” of the problems suffered by customers.
Morgan says this isn’t acceptable:
“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.”
.@TheFCA has responded to the Committee's letter about the IT problems at TSB. @NickyMorgan01 has said she is "deeply concerned by TSB's poor communications" about its IT problems. Read the full story - including @TheFCA letter - here: https://t.co/VFRpkCpyNL pic.twitter.com/rvof0AXNfv
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The beleaguered boss of UK bank TSB is being hauled back to parliament today to face fresh questioning over the IT meltdown that left millions locked out of their accounts.
Paul Pester is in the firing line over his handling of the crisis, and can expect plenty of criticism and tough questions from MPs on the Treasury Committee.
Last month, the committee accused Pester of being ‘extraordinary complacent’ over the botched migration to a new technology platform, so today’s session could intensify the pressure.
TSB’s IT crisis is one of the worst to have hit a bank ever - customers found they couldn’t log on via their computer or mobile phones, small businesses were unable to pay staff, and some householders found their mortgages had disappeared.
Cybercriminals have been taking advantage too, with reports that some TSB customers are falling victim to fraud.
Overnight, the Financial Conduct Authority - the City’s watchdog - has confirmed it is investigating the issue.
Andrew Bailey, chief executive of the FCA, says:
“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 has also put Pester in the firing line, accusing him of failing to come clean about TSB’s problems.
My colleague Angela Monaghan explains:
The City regulator has launched a stinging attack on the chief executive of TSB over the bank’s failure to be open and transparent with customers when an IT upgrade went badly wrong, locking as many as 1.9 million customers out of their accounts.
The Financial Conduct Authority accused Paul Pester of “portraying an optimistic view” of services after the botched operation in April that is still causing disruption for customers more than a month on.
“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,” Andrew Bailey, the FCA’s chief executive, said in a letter to the Commons Treasury committee.
In particular, the FCA think that Pester could have given MPs more information about the crisis when he initially testified on May 2nd. They believe he may have had useful information from the tech experts at IBM who have been trying to fix the problems.
The session kicks off at 2.30pm, when the Treasury committee will hear from the FCA.
They’ll then question Pester, along with TSB chairman Richard Meddings and Miguel Montes of parent company Sabadell Group.
Also coming up today
More European stock markets are rising in early trading, after America’s tech-focused Nasdaq index hit a record high last night.
Jasper Lawler of London Capital Group explains:
Tech stock were once again responsible for any excitement on Wall Street. Netflix and Amazon jumping 1.9% and 1.1% respectively boosted the Nasdaq to close at a record high at 7637.
This is the second straight session where tech stocks have been under the spotlight and we are seeing a lot of positive news surrounding the sector, Microsoft buying GitHub, Apple pushing new software and Amazon sales flying, when everything else in the market is looking a little drab.
On the economics front, Australia’s growth rate has picked thanks to booming demand for commodities:
The agenda:
2.30pm BST: FCA testify to the Treasury committee on the TSB IT crisis
3.30pm BST: TSB bosses testify to the Treasury committee
We have two panels today on the service disruption at TSB. First up is @TheFCA. We'll hear from Andrew Bailey, John Sutherland and Sheree Howard. Watch it live from 2.30pm here: https://t.co/0mYzbGfZMT pic.twitter.com/clnYRsQ0Zg
Our second panel today on the service disruption at TSB is with Paul Pester, chief executive of TSB, Richard Meddings, chairman of TSB, and Miquel Montes, chief operating office of Sabadell. Watch it live from 3.30pm here: https://t.co/0mYzbGfZMT pic.twitter.com/QlCNUUst6u