Published: Sun, June 10, 2018
Business | By Tara Barton

FCA and PRA launch investigation into TSB meltdown

FCA and PRA launch investigation into TSB meltdown

"I ask that the board consider the committee's view as a matter of urgency".

TSB has failed to pay compensation to customers who have been victims of fraud within two days of becoming aware of the problem, which is required under payment services regulations, Mr Bailey said in a letter to Nicky Morgan, chairwoman of the Commons Treasury select committee.

The letter added that the bank's problems have been compounded by TSB's unsatisfactory public communications since 23 April, after its IT systems failed.

Board members at TSB have been told by MPs to urgently consider sacking chief executive Paul Pester over major IT problems at the bank. Nearly 2 million people - more than a third of TSB's 5.2 million customers - experienced problems when making mobile and online payments as the result of a software failure, and the problems have not been entirely resolved.

"Many will be rightly asking if the current chief executive is the right person to sort out this mess".

Mr 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'.

In a reply to Morgan, Meddings said the bank had "made good progress in resolving the recent IT issues, and TSB is now functioning at, or close to, normal for the majority of TSB customers".

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Addressing MPs criticism of the bank's inadequate communication after the meltdown, and suggestions that TSB had been misleading, he said: "The board of TSB believes that communications since the migration have been made in good faith, and based on the information available at the time".

It emerged during the previous day's hearing that there had been 2,200 attempts at cyber fraud on TSB digital bank accounts following the system failure.

Edwin Morgan, director of policy at the Institute of Directors said: "The Treasury Committee has a vital role to play in holding our financial institutions to account, but ultimately a chief executive serves at the pleasure of the board and shareholders, not politicians".

"No opportunity was taken to correct this in subsequent written evidence of 11 May, despite this containing a section entitled "Fraud".

Dr Pester said: 'It must have been deeply distressing to receive a letter about this.

"This is absolutely incendiary stuff", he said.

FCA chief executive Andrew Bailey outlined the joint probe in a letter to treasury committee chairman Nicky Morgan, who has warned she is "deeply concerned" about how problems at TSB were communicated. Their renewed questioning of his handling of the crisis on Wednesday could raise questions about whether he can remain at the helm of the bank.

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