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UK regulators to probe TSB's IT woes

The U.K. Financial Conduct and Prudential Regulation Authorities will launch a formal investigation into TSB Banking Group PLC's IT failures.

In a letter to Nicky Morgan, chair of the U.K. Parliament's Treasury Select Committee, FCA head Andrew Bailey said the regulators will use their statutory powers to look into the issue, noting that the FCA has been "dissatisfied" with the bank's communication with its customers.

"We do not normally make this information public, but given the level of public interest, I want to be clear that we will be conducting this work," Bailey said.

IT issues have plagued TSB for six weeks after it migrated to a new computer system from April 20 to April 22. Some retail and business customers still encounter problems making payments and TSB's call centers are still busier than usual, the Financial Times reported.

Bailey said the regulators aim to determine if TSB is being transparent with regulators; if it understands the problems it faces; and if it has a coherent plan and resources to address the issues. The regulators will also monitor the bank's complaints and redress system, communications strategy and its approach to incidents of fraud.

The FCA has sent in a monitoring team to observe the progress in resolving the issues, which could reportedly take three to six months.

Paul Pester, TSB's CEO, and Miguel Montes Güell, COO of the bank's parent Banco de Sabadell SA, will face the Treasury Committee on June 6 for a second round of questioning, the FT noted.