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Version 9 Version 10
TSB suffers 10,000 fraud incidents since IT meltdown - business live TSB suffers 10,000 fraud incidents since IT meltdown - business live
(35 minutes later)
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.
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.
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.
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.
Question: are you confident no other banks do this?
Bailey says I think we would know that.
Sutherland says it’s a TSB issue.
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...
But this can’t descend into finger pointing.
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?
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.
Question: were your expectations on communications reflected in Pester’s testimony.
Bailey says it should have been a more thorough and balances communications situation.
My bias would be tell it as it is and communicate extensively.
Question: have you ever issued a letter quite like this before, including saying Pester was too optimistic and statements to the public were poor?
Bailey says we don’t have these situations too often.
Some parts of the bank’s service are functioning, and it’s fair enough to point that out but there is a danger of overemphasis of that which gets away from the fact there are parts that are troubled.
Sutherland says they have a torrid time with the branch systems, leading to very busy branches. It’s quite clear those systems problems still exist. It’s the bits that are not working we are not hearing so much about.
Here’s what FCA chief Andrew Bailey told MPs about the fraud attempts on TSB customers (at 2.40pm)
I”m going to be a little bit circumspect about what we say about fraud…as we don’t want to give information that fraudsters could use against the firm.
We think there’s been just over 10,000, 10,600, incidents, and that has resulted in a level of payout.
FCA special advisor John Sutherland then explained how the number of ‘alerts’ of possible fraud are still rising. These alerts lead to customer accounts being blocked or stopped while the situation is investigated - but TSB is struggling to cope.
Sutherland said:
“TSB is resourcing up to clear those alerts as soon as they can, but they are still on an upward trend.
That doesn’t indicate so much that there is an increasing amount of fraud, it’s just that they not resourcing themselves yet to clear them fast enough.
Sutherland then talked about the “huge variability” in TSB’s ability to handle calls from customers who may have been defrauded, with just one in 10 getting through at the busiest times. Clearly that’s not acceptable.
Question: Do you feel TSB has adhered to the requirements on communcating the situation.
Bailey says we have had some frank conversations about communications, and we said in our letter we were not satisfied.
There is an onus of overcommunication, to tell customers what is happening. There is uncertainty at the start about what the situation is.
Looking at the daily service levels, they were very volatile. Looking at averages doesn’t give the entire picture.
There should have been more communication and it needed to be more reflective of the fact it was a volatile and uncertain situation. Its not easy to communicate volatile. But otherwise you see a lot of criticism from customers.
A more straightforward recognition of what the situation was would have been helpful.
Has TSB always co-operated?
Bailey says yes, they are working very hard, I do not want to call into question their hard work. They are in a hole and they are trying to get out of it.
That is not the issue. The issue is how did you get in and how do you get out of it and protect the interests of customers.
Bailey is asked about the suggestion that TSB chief executive Paul Pester had some information including slides from IBM which he did not share with the previous hearing.
Bailey says IBM were brought in on the Wednesday, by the following Sunday they had produced slides of the issues. We saw those on Sunday, the hearing followed on Wednesday.
They are not definitive but they do point to things. At the hearings, Pester said IBM believe issues are in the middleware.
But it appears to be not just in the middleware, which the IBM slides show.
Question: where are we in timeline for having a coherent plan for the recovery of services?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.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.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?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.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.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.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.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?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.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.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.We heard just before 9,. we had the first call just around midnight.
The FCA response was activated the next day.The FCA response was activated the next day.
Morgan says FCA says they had not met standard for repaying fraud, why was that?Morgan says FCA says they had not met standard for repaying fraud, why was that?
Bailey says they were initially overwhelmed.Bailey says they were initially overwhelmed.
The FCA’s Sheree Howard says, they have now prioritised that.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.Morgan says is there a pattern of TSB trying to argue the case before refunding.
The FCA says no.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.
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:
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’!
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 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.
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 2.30pm
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.
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. 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 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.
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:
“Of course, it [Qatar Airways] has to be led by a man, because it is a very challenging position.”
More here.
Qatar Airways CEO apologises for suggesting a woman could not do his job https://t.co/ZuT7qxc2VW
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.
European 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.
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.
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.
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.
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.
#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