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TSB lacked 'common sense' in 2018 IT meltdown, report says

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
TSB said it was sorry for customer inconvenience caused during its IT migration programme. Photo: Nick Ansell/PA Images via Getty Images

The chairman of TSB apologised to customers on Tuesday after a damning report concluded opportunities were missed to avoid last year’s disastrous IT meltdown.

A botched migration to a new computer system last year left many customers unable to access internet or mobile banking and led to a surge in fraud.

An independent report by law firm Slaughter & May, published on Tuesday, said issues arose because the new platform “was not ready to support TSB’s full customer base” and TSB’s technology provider, which was a sister company, was not ready to operate the platform.

Many of the issues “could have been identified” ahead of the launch but an “ambitious and unrealistic” timetable blinded those involved to the issues.

The heavily critical report dished out blame to everyone involved.

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Spanish banking group Sabadell bought TSB in 2015 and pushed to move the bank on to a new tech platform built by its in-house IT company SABIS. Sabadell set an “ambitious and unrealistic” timetable for the switchover, according to Slaughter & May.

“The pattern of setting a desired end date and then creating a plan to fit that date, whether or not it was realistic or involved taking too much risk, was set for the remainder of the programme,” the report said.

Slaughter & May said the board of TSB didn’t consider the risks of switching all of its systems over to new platforms at once and missed “common sense” issues, such as how the switchover could be ready four months after the originally planned date when some parts of the project were seven months behind behind schedule.

Those involved in building and testing the new platform were also criticised. Performance targets were lowered when the platform failed to hit them during testing. The board was also told just weeks before the launch that there were around 800 defects on the platform when the true number was at least 2,000.

“TSB went live with a platform that was, in the event, neither stable nor complete,” the report concludes.

"On behalf of everyone at TSB, I want personally to apologise again for the service disruption which customers experienced during the spring and summer of 2018,” TSB chairman Richard Meddings said.

The botched migration led customer complaints to spike to ten times their normal level and fraud levels surged to 70 times usual levels.

However, Meddings pushed back Slaughter & May’s report saying it “doesn’t paint the full picture of migration.”

TSB challenged Slaughter & May’s claim that not enough testing was done and the board failed to seek adequate outside advice.

The bank’s board pinned the blame for the disruption on the faulty configuration of one of its new data centres, which it said Slaughter & May failed to take account for in their report.

However, Meddings said the board would “learn” from the disastrous migration and said TSB has already “evolved to be a better business.”

“We have already made major changes as a result of what we have learned, including moving to take direct control of our IT operations,” Meddings said. “With the leadership of Debbie Crosbie as our CEO, we are now well on track to get TSB back to what it does best: serving customers and bringing better choices to UK banking."

Crosbie took over as TSB CEO from Paul Pester, who left the bank last year in recognition of the tech disaster. The botched switchover cost the bank more than £300m last year.

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