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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

TSB crisis: Customers get compensation, as IBM experts fly in - as it happened

TSB customers using ATM machines this week.
TSB customers using ATM machines this week. Photograph: Alamy Stock Photo

Closing summary: TSB crisis rumbles on

Time for a recap:

The IT crisis at TSB Bank is heading towards its eighth day, as the company continues to struggle to fix problems created by a botched IT migration last weekend.

TSB has called in experts from IBM, who are now trying to fix the issues that are still preventing 50% of customers from accessing its internet banking services.

CEO Paul Pester has told IBM to find a solution by Saturday - and admitted that the bank is ‘on its knees’, following the move onto new IT kit from its parent company Sabadell.

He said:

“We are on our knees, we will get up, and come back fighting”.

Sabadell has predicted that the mess won’t be fixed until next week -- one reader has been told it could take five working days.

The bank has begun compensating customers, with a £40 payment to a couple.

It has also waived all overdraft fees in April, and pledged to raise the interest rate on its current account from 3% to 5% - worth up to £30 a year to customers. We understand the measures will cost at least £20m.

There’s some good news for small businesses - HMRC have said they’ll be understanding if people can’t get into their accounts to make VAT payments.

Several readers have told us that they intend to close their accounts, suggesting TSB will suffer long-term damage from the IT fiasco. Some have also expressed support for TSB’s frontline staff, who have been through a very rough week.

TSB High Holborn.

I may pop back later if there’s big breaking news. Until then, thanks for reading and commenting. Goodnight! GW

Our latest news story on the TSB crisis is now live. Here’s a flavour:

TSB customers have spent their seventh successive day battling to access their accounts as the bank admitted that the crisis could run into next week.

The bank’s boss, Paul Pester, said TSB will waive £10m in overdraft fees and pay extra interest on current accounts. He has hired a new team of IT experts from IBM who have been told the problems must be fixed by Saturday.

However, Jaime Guardiola, the chief executive of TSB’s Spanish owner, Banco Sabadell, said customers may have to wait until next week before normal service returns.

The Guardian has uncovered images on LinkedIn of IT workers in Spain who handled the botched transfer celebrating with sparkling wine and exclaiming “TSB transfer done and dusted!” and “Hell of a team!”. The pictures were posted just as the meltdown was beginning, and up to 1.9 million customers were subsequently locked out of their accounts.

Our financial editor, Nils Pratley, writes that relations between TSB and its Spanish parent company look rather tense this week....

Let’s try to be generous to Paul Pester, TSB’s beleaguered chief executive. His handling of the fallout from the botched IT “upgrade” has been poor – some of his statements and tweets have been nonsensical, others have been factually wrong – but it is already clear that the primary blame for the fiasco itself lies in Spain, at the door of Banco Sabadell, TSB’s parent.

Nils thinks this may explain Pester’s refusal to rule out taking a bonus this year:

He should have made the gesture, but he may be wondering if the internal blame game will end with his exit and the usual contractual wrangles. The head of an overseas subsidiary usually makes a suitable fall guy.

More here:

Here’s a round-up of stories from TSB customers this week:

Paul Pester has told the Daily Telegraph that he doesn’t yet know exactly what has caused this week’s IT meltdown, preventing an army of customers from accessing their accounts online.

Asked what the specific issue was, he said:

“That’s why I have got IBM here.

“We have two datacentres, miles of fibre-optic cable and several layers of software. Somewhere among that architecture are issues causing capacity constraints.

“We have a team of experts that will get to the bottom of this.”

Customer: TSB staff have been doing their very best

Richard Brittain, the TSB customer who set off today to close his account (having borrowed the petrol money from a friend), has got back in touch.

Richard ended up speaking with TSB’s Kent area manager - and learned that they think it might take another five working days to clear all the technical problems.

The area manager was able to ‘bend’ the withdrawal rules, so Richard could withdraw all his fund and put them in another bank. TSB also managed to trace money that had gone missing from the account since the IT problems began.

It sounds like a good effort under the circumstances.

As Richard puts it:

It was actually refreshing to talk to someone senior enough who could actually deliver solutions, rather than focusing on the problems.

I must say, TSB need to not only compensate their customers, but they also need to recognise their staff who have been a real asset. All of the staff I have come across are genuinely sorry and they really are trying their best to help.

I have been asked by the area manager to leave the current account open, so that TSB are able to gain my trust back. At the moment, TSB are going to need to work extremely hard to get the public trust back. We can’t change what’s happened, but the way that TSB deals with this issue will be the deciding factor as to whether we’re going to remain with them.

TSB has been churning out some alarming error messages this week -- baffling customers with talk of BeanFactories (to do with programming language Java) and NullPointerExemptions ( ¯\_(ツ)_/¯ ).

IT expert Simon Needham suspects that the bank’s user authentication processes aren’t scaling properly -- which is why half its internet banking customers aren’t getting into the service.

Bradley Post, managing director of Rift Tax Refunds, says TSB customers should certainly pursue the bank for compensation, and tell HMRC of any problems too.

Small business using TSB may struggle to pay HMRC due to the recent problems the bank is facing with their IT systems. The good news is that HMRC will take the circumstances into consideration, however, customers need to record the problems they have encountered so they can put a case together and ensure they do not pay more than they should.

The bigger issue now is how customer opinion will change for TSB with some people choosing to sort their finances elsewhere.

According to Moneysavingexpert.com customers are now receiving compensation. If you are left out of pocket due to these issues you should look to contact TSB immediately”

Claire McAdam and Ian Roddie’s £40 compensation is dwarfed by the bills which some small businesses may claim from TSB.

For example, tiler Phil Rooney told BBC Hereford and Worcester that the chaos had already cost him thousands as he was unable to pay staff from his account.

We’ve had staff walk out on us, sub-contractors, tilers, electricians, because we’re not in a position to be able to pay them by the internet payments that we usually use so it’s cost us so far £2,000 this week.”

TSB starts paying compensation to customers

Moneysavingexpert.com is reporting that the first compensation payments are already going out to customers who have complained.

It said Claire McAdam and her partner Ian Roddie from Glasgow have been paid £40 compensation after McAdam was unable to access her bank account online or make a bank transfer from her account to repay money she owed on a credit card.

The bank paid McAdam £15 to cover interest charged for delayed payments on her credit card, and a further £25 for inconvenience caused. The £40 was paid into McAdam’s TSB account just before noon on Thursday.

If ‘inconvenience’ payments to affected customers match the £25 paid to McAdam, then TSB is in line for hefty payouts. It has 1.9m online and mobile customers, and if all received the payment the bill would be £47.5m.

Broadcast journalist Natalia Crawford of Radio Clyde News has tweeted about the “absolutely disgraceful” situation which TSB customers such as herself are suffering:

HMRC: We'll take TSB IT crisis into account

Britain’s tax authorities have told us that they will understanding if small businesses cannot make payments to them because of the TSB IT meltdown.

Some business owners have warned that they cannot make cash transfers, such as VAT payments, to the authorities because they cannot currently get into their TSB account.

Asked about the situation, a HMRC spokesperson says:

“HMRC will take the circumstances of TSB customers into account if asked to do so.”

So, TSB customers should record evidence that this week’s computer problems prevented them making their scheduled payments.

If they have a reasonable excuse, in HMRC’s view, they shouldn’t incur any penalties for late payments - as long as they fix the situation when possible.

That might reassure SME owners, such as animator Lee Johnson and entrepreneur George Lamptey, who have both tweeted TSB about the issue today:

Updated

TSB wants results from IBM by Saturday

Just in: Paul Pester has told ITV News that IBM team of experts must fixed TSB’s problem by Saturday.

That suggests that the bank expects services to remain disrupted until then, but is perhaps hoping to recover by the start of next week (which chimes with Sabadell’s comments)

He’s also continuing to duck questions about his bonus, some of which has been held back until the IT migration was completed....

TSB customer Penny Simpson still cannot log into her account online - despite TSB’s claim that things are running smoothly for the vast majority of customers.

She reports that TSB refuses to accept her User ID and password. When she clicks ‘forgotten User ID’, the bank sends her.... her old log-in details, and says they are now clear to use.

So she tries, only to be told they’re incorrect....

Penny’s also unpressed by Paul Pester’s claim that the underlying banking platform is working well - even though half of internet banking customers ares still locked out.

This is like saying the kitchen’s cooking up a storm but the restaurant can’t get any food.

I’m sick to death of Paul Pester and his shambolic communications. And, most of all, I’m sick of TSB using the word ‘some’ as if this is a handful of customers. It isn’t; it’s millions.

TSB’s Classic Plus pays interest on the first £1,500 of money in the account.

So, raising the interest rate on balances from 3% to 5% is actually only worth £30 to a customer per year, or £2.50 per month.

Updated

Getting back (briefly) to the European Central Bank meeting in Frankfurt....

ECB chief Mario Draghi has warned that global risks such as protectionism have risen - a clear nod to Donald Trump’s trade spat with China.

Draghi also point out that European economic growth seems to have moderated broadly recently, with some countries experiencing a loss of momentum.

But growth is expected to remain “ solid and broad-based”, he adds -- suggesting the ECB isn’t bracing for a recession....

TSB customer Richard Brittain has has enough of TSB - he’s on his way to his local branch to close his account, having borrowed money from a friend to pay for the petrol.

He tells me that he’s made 13 calls to TSB, only to be disconnected after waiting for up to two hours.

Richard says:

I am now going into town to get all my money out. TSB have now told me they need 7 working days to fix my current account.

He also has sympathy for TSB’s staff, who have been “literally in tears” as they’ve handled calls from customers.

I don’t think enough is being done to report these issues to TSB. Their number is just constantly engaged, and when you do get through they cut you off after a 2 hour wait in the queue.

I have been without access to my bank since Friday... and now we’re being asked to wait even more! Time to move to a better bank! I’m £400 down at the moment, all because of TSB.

Money is in my account and it’s being withheld from me!

Just goes to show, you cant believe the news. TSB are telling everyone this issue is fixed, yet it’s far from it.

Another 2 hour wait on the phone to get through to someone, to just be told that they’re “working on it”

We are on day seven now, and I’ve had no answer as to when they’ll be fixing my issues. TSB have just asked me for 5 WORKING DAYS to get my current account “un-deleted” and money returned.

Meanwhile, the staff are literally in tears on the phone. Its not their fault that their employer decided to screw over two million of us.

But, this doesn’t get my bills paid. I honestly don’t know what else I can do. Their phone system is diabolical, I get disconnected after waiting in a queue for 2 hours!!

Back to TSB, and Paul Pester has just tweeted a reminder of this morning’s announcement:

In other banking news, the European Central Bank has just voted to leave eurozone interest rates unchanged at 0.0%.

It also repeated its promise to keep buying government bonds until at least the end of September, or until inflation has risen sustainably close to its target.

TSB customers vow to close accounts

Several more TSB customers have told us that they intend to close their accounts.

David Green, 39, is the owner of a plant and machinery hire company in Birmingham and thinks heads should roll for the mess:

“It’s an absolute disgrace. How can I run two businesses with staff and suppliers who require paying from day-to-day? Some suppliers are refusing to serve us services as we cannot pay like we always have done. It’s not their fault, I wouldn’t expect them to, but it’s diabolical that we’ve been left like this.

It’s ruined my business week completely. I have staff who think we can’t afford to pay them. We have suppliers who think we are making excuses. I have to keep sending screenshots to people that question me. How embarrassing for a company which will turn over 10 million this year! How can I operate like this? Sackings should happen and the guy at the top needs to join the real world.

Just because he doesn’t need to use his bank every day doesn’t mean we are all in the same position as him. I will be closing my business accounts ASAP as I have lost all faith and cannot risk this happening again.”

Textile designer, Lucie, 31, says it is very stressful not knowing if her money is safe:

“I’ve tried to log in however TSB doesn’t recognise my password! The robotic repetition of apologies and responses on their website are so mind-numbingly bland and unhelpful. I’ve actually just come back from the bank where I tried to pay my rent and it didn’t go through. Their advice was to just: “Keep trying”. As soon as this is over I will be switching my bank. “

To say that Lorraine Kelly, 52, from London, is fuming is an understatement, she tells us:

“I can honestly say that since the weekend it has been a nightmare. I urgently needed to transfer funds to top up my smart meter (as I’m on prepay) but after 40 minutes on hold to TSB the line was cut.

Having no choice I stupidly tried numerous times with the same outcome. In sheer anger I clicked on their status report and the final insult was a message saying that TSB have restricted some selected customers. What the hell? If I ever get to talk to anyone at TSB it will be to close my accounts and transfer all my money.”

Placating customers will cost TSB at least £20m

TSB’s pledge that no customer will be left out of pocket as a result of the fiasco will come with a hefty price tag.

The bank estimates that its decision to waive all overdraft fees and interest charges in April, as well as raise the interest rate on its ‘Classic Plus’ account to 5% from 3%, will cost an estimated £20m.

That’s on top of any regulatory fine the bank might face, as well as the (presumably large) bill for drafting in IBM to fix the problems.

The Times is reporting that TSB was warned that its IT migration would flounder unless it spent more money.

It says:

A TSB adviser warned the bank against embarking on a major internet upgrade on the cheap, The Times can reveal.

Consultants raised concerns in 2015 that the bank was not setting aside enough money for the “incredibly complex” project to move customers to a new online system.

One said: “There have certainly been some examples of where it has cost significantly more to re-platform an entire bank. It is not overly generous as a budget for that scale of migration.”

Parent company Sabadell reported this morning that it set aside €71m in one-off IT costs to cover the TSB migration. That’s roughly twice what UBS analysts had expected....but clearly it wasn’t enough!

Radio 5 Live have uploaded their interview with Paul Pester, in which he admits TSB is on its knees and promised to compensate customers from losses suffered through this week’s mess.

TSB’s efforts to placate its customers by waiving overdraft fees and boosting its current account interest rate has come too late for some customers.

Mark Ellison tells us that he’s moving his account to Metro Bank “with a heavy heart”, as he had previously worked for TSB for five years.

He’s also filed a complaint over this week’s disruption.

IBM’s team of experts have no time to waste -- TSB customers are continuing to report problems with their accounts.

Updated

Sabadell: TSB won't be fixed until next week

TSB’s Spanish parent company has warned that services might not be back to normal until sometime next week!

Jaime Guardiola, the CEO of Banco Sabadell, told analysts this morning that the migration onto its IT kit (from TSB’s previous owner, Lloyds) had been problematic:

“Fixing the problem took more time than expected and we were not able to reopen access until Wednesday. I expect next week we will reach something very close to normality,”

This is quite a u-turn. On Monday, Sabadell announced that the weekend migration was a success, only to quietly remove that press release the next day.....

Guardiola also reiterated TSB’s pledge to compensate customers, adding:

“We will make sure that no customer is left out of pocket and we are asking customers to file complaints that will be processed.

Updated

Waiving overdraft fees is a good start, but it won’t tackle all the losses suffered by TSB customers this week.

People could be hit by late fees, for example, if they fail to meet credit card bills or other loan repayments.

Clea Bourne, lecturer at Goldsmiths, University of London, says the whole financial sector should show some understanding .

The decision to call in IBM tech experts to tackle TSB’s IT problems suggests that the problem is bigger than the company realised and may take several days to fix.

Remember, at 3.40am yesterday Paul Pester was confidently tweeting that things were ‘up and running’ again -- something that is going to haunt TSB chief for a while.

Now he actually has to make it happen, declaring:

“I will take direct control from 8 o’clock this morning for our platform, I’ve drafted in a team of global experts from IBM.

They are reporting to me, directly to me and I will take control of the platform until it gets fixed. I am putting things right.”

Updated

Pester: I'm too busy to think about resigning

Q: Were you warned last week that you weren’t ready for this IT migration?

We were ready for the platform switch, CEO Paul Pester insists. TSB expected some turbulence, but no-one expected the issues that have hit the bank since the weekend.

Q: Have you considered resigning?

I haven’t even had time to think about it, Pester replies.

That’s the end of the Radio 5 interview.

Updated

Paul Pester is now being grilled on Radio 5 Live over TSB’s IT mayhem.

Q: Why didn’t you give more information to customers, and claim that everything was fixed when it wasn’t?

Pester says that the fundamentals of the bank, such as standing orders, direct debits, ATM machines, are working well.

The problem is with capacity -- handling the number of customers who want to use internet and mobile banking services.

Q: Why did you tweet that TSB’s services were ‘up and running’ , when for many customers it clearly wasn’t?

Pester says TSB’s IT provider (parent company Sabadell) told him it was fixed. Clearly that wasn’t the case.

However, he’s now taken personal control - a team of experts from IBM will land at Bristol at 8am his morning, and start to tackle the problem.

It’s unacceptable that only 50% of customers can access our internet banking, declares Pester.

Q: Isn’t it also unacceptable that you didn’t have control of your customer’s accounts over the weekend?

Pester ducks the question; instead, he plugs the decision to waive overdraft fees and raise the interest rate on the Classic Plus current account for current customers who “stick with us”.

This is a fight worth fighting. TSB was created to bring more competition into UK banking.

Q: Will customers be properly compensated?

No customer will be left out of pocket, Pester pledges. We won’t be penny-pinching.

Small businesses who have suffered losses because they haven’t been able to pay suppliers or contractors should get in touch.

Asked whether he would be giving up a potential £1.6m bonus, Pester told BBC Radio 4 that it was a matter for the company:

“The last thing I’m worried about at the moment is bonuses and pay. I’m focused on putting things right for customers. It’s not my decision, that’s a focus for them [the board]. It’s a decision for the remuneration committee.”

Speaking on Radio 4, Paul Pester says he has taken control of TSB’s IT platform himself - to tackle the problems that mean only 50% of its customers can get online.

TSB waives overdraft fees and raises interest rate

TSB chief executive Paul Pester.
TSB chief executive Paul Pester. Photograph: Nick Ansell/PA

NEWSFLASH: TSB has announced that it will waive all overdraft fees and interest charges for retail customers and small business owners for April, as it tries to assuage the anger over its IT meltdown this week.

After days of turmoil, TSB has also decided to raise the interest rate on its popular ‘Classic Plus’ account to 5% (a very decent interest rate these days), from 3% -- an attempt to prevent customers fleeing to a rival.

In a statement, it says:

  • No TSB customer will be left out of pocket as a result of these issues – to begin to put this right we will be waiving all overdraft fees and interest charges for all of our retail and small business customers for April.
  • As a way of saying thank you to our customers for sticking with us, we’ll be increasing the interest rate on our Classic Plus account to 5% AER.

CEO Paul Pester admits that TSB’s migration to new servers last weekend had been very unsatisfactory.

He says:

As we moved over to our new banking platform last weekend, the landing was an incredibly bumpy one for our customers, and for that I am truly sorry. This is not the level of service that we pride ourselves on providing – nor is it what our customers have come to expect from TSB....

“Of course, customers can rest assured that no one will be left out of pocket as a result of these problems. To begin to put things right, we will be waiving all overdraft fees and interest charges for all of our retail and small business customers for April.

TSB also reveals they they’ve called experts from IBM in to help fix the problems with its internet banking.

In the meantime, customers still report problems:

The agenda: TSB crisis rumbles on; ECB meeting

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

One of Britain’s worst IT botches of recent years continues to rumble on today. TSB customers are still reporting that they can’t access the bank’s online systems, nearly a week after they were taken down for a planned IT migration.

Last night, TSB admitted that its internet banking service is only running at 50% capacity - which helps explain why scores of users have been locked out.

In the eurozone, the European Central Bank is meeting to set monetary policy.

Investor will hope for hints about how the ECB will handle its money-printing stimulus programme, which currently runs until September.

In the markets, European stocks are expected to nudge higher after Facebook posted record earning figures last night, suggesting its data privacy problems haven’t hurt profitability.

Here’s the agenda:

  • 12.45pm BST: ECB decision on interest rates
  • 1.30pm BST: ECB chief Mario Draghi holds a press conference
  • 1.30pm BST: US trade figures for March

Updated

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