TSB Banking Group PLC CEO Paul Pester said the bank has already spent some £70 million as a result of the ongoing IT failure that it has been experiencing since moving to a new platform in April.
The funds have gone toward hiring extra staff to deal with complaints and compensating clients, Pester said during an appearance before the parliamentary Treasury select committee, and the sum is rising. It has also waived £29 million in fees to customers affected by the glitch and paid some £20 million to customers who were targeted by fraudsters after the computers broke down, he added.
TSB booked statutory pretax profit of £162.7 million for full year 2017, and pointed in its earnings release for the year to rises in customer numbers and deposit balances.
"We would never have migrated if we had any sense that these were the sorts of problems we were going to suffer," Pester told the committee, referring to the migration of customer records from Lloyds Banking Group PLC's infrastructure to TSB's new computer system. The system was built by a firm that like TSB is owned by Spain's Banco de Sabadell SA, which acquired the lender in 2015.
The bank's IT problems were seized on as an opportunity by hackers and fraudsters, said Pester, with fraud occurrence rising 70x above the level seen in the normal course of operations. About 1,300 accounts were hit by criminals, who made some 2,200 fraud attempts, he said.
The criminal attacks on the bank's clients had been "very, very aggressive" at the beginning of the fallout, he added, with fraud rates now at around three to four times the standard.
Around 12,500 account holders have left the bank since the start of the debacle, and it is losing depositors at a rate of 400 to 500 a week, he said, not counting any falls in the rate of new applicants. The bank received 93,700 complaints about its service over the course of the failed migration process, said Pester.
Members of Parliament who sit on the committee grilling Pester said they had been shown evidence by constituents that TSB continues to mishandle the process of repair and remediation.
For instance, Labour MP John Mann said one constituent who had never been a customer of TSB had been sent the full account details, including personal details, of a TSB client. Executives denied knowledge of such an error, but admitted that the firm had by accident put multiple letters destined for different customers in the same envelope and mailed them, and that during the account switching process following the IT meltdown, it had wrongly told creditors of some 370 customers that the account holders had died.
Separately, Mann characterized the bank's offer of £100 as compensation to two customers whose wedding plans were affected by the IT failure as "pitiful."
