Andrew Bailey, the chief executive of the FCA, informed MPs who are members of the Treasury Select Committee that there had been approximately 10,600 incidents of fraud that is related to the IT meltdown of the TSB.
He stated: “They are in a hole and they have got to get themselves out of this hole.”
Bailey said that the FCA already had some “quite frank conversations” with the TSB regarding their level of communication. Apparently, the watchdog had been “not satisfied” with it.
Paul Pester, the chief executive of the TSB, informed the MPs: “I am deeply sorry to say that the issues we created as a consequence of migration were an opportunity for criminals to target TSB customers.”
Pester said that the bank was “overwhelmed”, having observed 70 times the normal level of attacks of fraud, which is well more than the 4 times that it has normally anticipated with this kind of systems migration.
Pester admitted to the committee that approximately 1,300 customers of the TSB experienced financial loss because of the fraudsters after the failure of their IT system.
He added that even though there were 10,600 “fraud alerts,” only about 2,200 “actual attempts” of fraud were actually made.
There have also been around 93,700 customer complaints that were lodged since the IT systems failure.
Pester says that there is no evidence he or TSB had deliberately misled anyone, despite some suggestions from the MPs that he had surely misinformed both the customers and the parliament.
John Mann, a member of the Committee, asked the bosses of the bank whether “heads would roll” in the wake of the disruption.
Richard Meddings, the chairman of the TSB, informed MPs that the bank would wait for the conclusions from an internal investigation that is being carried out by Slaughter & May, a law firm, prior to any punitive action.
He stated: “Where there is culpability, we’ll act on it.”
The audit of Slaughter & May is investigating at how the migration decisions of the IT system were made within the bank and who made them.
It will also assess the response of the bank to the migration failure that happened in April and how the board of the TSB has managed the subsequent disruption.