1,300 TSB customers have had money taken out of their accounts by fraudsters, the bank's chief executive Paul Pester revealed today, as a grilling by MPs exposed the full devastating impact of the bank's catastrophic IT meltdown.
Giving evidence to the Treasury Committee today, Pester admitted the bank has had more than 90,000 complaints about its online banking problems and some customers had had to wait nine hours on the phone to speak to TSB's fraud team. He also revealed some 370 former customers who switched away were wrongly reported as 'dead', in a blunder first revealed by MoneySavingExpert.
Financial Conduct Authority (FCA) chief executive Andrew Bailey also appeared in front of MPs and said he didn't think there would be a "standard rate" of compensation for customers affected by TSB's IT issues.
The hearing came after the FCA slammed the bank's handling of its IT meltdown in a letter published today- warning that 40% of calls were still being abandoned as recently as a week ago and fraud victims have not been repaid quickly enough.
If you've been affected by TSB's IT meltdown, see our TSB online banking problems guide for full help and how to claim compensation.
What we learnt today
The Treasury Committee interviewed senior figures from the FCA and TSB today in its second hearing into the IT meltdown. MPs tackled many of the issues raised in a letter MoneySavingExpert founder Martin Lewis sent to the committee ahead of the hearing.
Here are some of the things we learnt:
- There have been 10,600 fraud alerts on TSB accounts and 1,300 customers have had money taken. FCA chief executive Andrew Bailly told MPs that there had been "just over 10,000, 10,600 incidents" since the IT meltdown began. Pester later clarified this meant there have been 10,600 fraud alerts placed on accounts, and 1,300 customers have had money taken from their account.
- TSB has seen 70 times the usual number of fraud cases since its IT problems began. Pester said: "I obviously apologise profusely for this." He added that fraud levels rose significantly at the start of May, but have since dropped back down to two or three times the normal level.
- Some customers have waited up to nine hours on the phone to report fraud. Pester said: "I've been shocked to hear of customers waiting five hours, seven hours, nine hours on the phone." He said that a dedicated line had now been set up to deal with fraud, and wait times are now "a matter of minutes".
- We STILL don't know when the problems will be over. Speaking to MPs, FCA special adviser John Sutherland said: "In terms of an overall plan that says: 'we expect to be at the service level we would expect pre-migration' - we haven't seen that."
- Customers shouldn't expect a minimum compensation payout. Asked whether there would be a fixed amount of compensation customers affected by TSB's IT problems could expect, Andrew Bailey said: "I'm not sure we'd have a fixed minimum." He added that customers have been affected by the issues in different ways and said: "I don't think there's a standard rate."
- A total of 370 customers had their 'death' wrongly reported to companies and their direct debits cancelled after they switched away from the bank. Pester said: "Clearly there was an error in the software in these cases. The new system generates the switching letters, so within the new system that we've moved on to, it's fixes into [ie, changes to] that new system that would've led to these problems." He added that TSB is contacting the banks the customers have moved to to offer compensation, but didn't give a figure on how much they should expect.
- 12,500 customers have switched away from TSB since the start of its IT problems. Pester said the bank was now seeing around 2,000 customers switching away from the bank a week. 600 a week are switching to the bank, so it's losing 1,400 customers a week.
- Of the 90,000+ complaints TSB has received, 24,000 customers have so far been compensated. Pester wasn't able to provide examples of the level of compensation customers had received, but said he would write to the committee with further information.
What did the FCA's letter say?
Andrew Bailey, chairman of the Financial Conduct Authority (FCA), has written to the MP Nicky Morgan, who heads the Treasury Committee, to confirm the regulator and the Prudential Regulation Authority (PRA) are investigating the bank.
Bailey said the move would not normally have been made public but had been in this case due to the level of public interest. He tore into the bank over the ongoing problems, highlighting that as of 30 May 40% of calls were still being abandoned or disconnected before a customer got to speak to someone, and warning fraud victims should have been refunded more quickly.
The letter, which was dated 30 May, was published this morning by the Treasury Committee. It included more details about the preparation which went into TSB's migration of IT systems and the scope of the problems after. Here are some of the key points:
- 40% of calls were STILL being abandoned as of 30 May. TSB's telephone system, which gets between 40,000 and 50,000 calls a day, was still experiencing problems, with 40% of calls being abandoned or disconnected before customers got to speak to someone. Wait times were over 30 minutes.
- Fraud victims have not been refunded quickly enough. TSB has not met the requirement in the Payment Services Regulations to refund customers as soon as possible or by the end of the following working day. The bank has said the backlog will be fixed by early June.
- There were STILL problems in branch. Bailey said some branch systems were not working, and while there had been improvements there were still operational problems.
- There are concerns TSB has not been 'open and transparent'. Bailey said: "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." He said at the time when TSB said the "vast majority" of customers could log in, the first-time log in rate was only 50% online.
- There were problems with account switching. In the first week of the IT problems the acceptance of switch requests fell to 55%, but recovered to rise to more than 85% the following week.
- Up to 400 customers could see other accounts. In the first few days some customers could see accounts they should not have been able to see. This was reported to the Information Commissioner's Office.
Bailey said at any one point up to 14 FCA or PRA employees have been in the TSB offices monitoring the situation.