Snap summary: So much for Pester power
Any ambitious junior bank executives out there should watch that hearing again closely, as an example of how not to handle a select committee.
In happier times, Paul Pester would challenge his staff to ‘beat the boss’ in triathlons. But today, the TSB CEO found himself on the wrong end of a beating from MPs.
There’s clearly a massive disconnect between TSB’s view of its IT crisis, and the view which MPs hear from constituents who have been unable to get a decent banking service (or ANY, in some cases) for 12 days and counting.
Although Pester did remember to apologise a few times (an essential shield on these occasions), it looked less-than-fully sincere when he then argued that many things were actually running smoothly.
The correct response to being told that two of the committee’s own staff can’t log into TSB is NOT to joke about having so many customers. It looks arrogant, when contrition is required.
No wonder Nicky Morgan accused Pester of simply not understanding the size of his mess, and the reputational damage to TSB and beyond, saying:
What we are hearing this afternoon is the most staggering example of a chief executive who seems unwilling to realise the scale of the problem that is being faced.
That could yet be his epitaph, if TSB can’t get systems working properly, fast, and satisfy the 40,000 complaints filed in the last 12 days.
Pester also failed to answer some predictable questions. For example:
-
He couldn’t say when the crisis will be over
-
He didn’t know exactly how many small firms have been hit
- He wouldn’t say how large the compensation bill could be
Pester has, finally, had the nous to give up any bonus for this IT migration - but this may be an empty gesture, as the board may well have decided that he’d not earned it anyway. He could still get a bonus for his wider work (although not for today’s performance, I suggest).
MPs may have had some sympathy when Pester said how much he regretted the “terrible” decision to press on with the migration. But alas, Doc Brown wasn’t waiting outside Portcullis House with a DeLorean - and with Pester’s recent form, it might have stalled anyway.
If he had a time machine, it almost certainly wouldn’t work
— Henry Mance (@henrymance) May 2, 2018
And on that note, we’re wrapping up for the day. Thanks for reading and commenting. GW
Updated
A TSB customer, Penny Simpson, isn’t impressed by Pester’s performance:
Pester is in another world. He is producing sheets of data that tell him 95% of his customers can log on.
WE CANNOT LOG ON and we have not been able to for 11 days. Is he in denial or just telling lies? Please media, help us. He is just telling people to contact him if they have problems. How? You cannot get through on the phone, you cannot log on.
Nicky Morgan wraps up the session by telling TSB that the committee expects customers to be properly compensated -- including finding a replacement car for Simon Clarke’s constituent.
She also declares that the committee expects to see the full Slaughter and May report into what went wrong.
Meddings politely protests, saying the committee can certainly see the key findings, but might not be allowed to see any commercially sensitive information.
Morgan says the committee would like to see the full report...and early information on the compensation scheme.
And she concludes with a fairly damning assessment of the situation at TSB:
At the end of the day, this is a bank for whom many customers feel you are not saying “yes”...but making it as difficult as possible to get hold of the money to pay bills and putting them in an impossible financial situation.
That’s the end of the session.
Updated
Pester: If I had a time machine....
Q: With hindsight, would you do the migration again?
CEO Paul Pester says he would not!
If I had a time machine, I would take myself back to one minute before one o’clock in the afternoon and change the decision.
If there was one decision in my life I could change, it’s the decision to go ahead with the migration on 1pm on Sunday afternoon
Clearly it was “a terrible decision” for our bank, for our customers, and me personally, Pester explains ruefully.
Of course I would change it.
Chairman Richard Meddings concurs - but also insists that TSB didn’t have any idea that the migration would go so badly. If it had seen any hint of the problems, it wouldn’t have pressed on.
Updated
Paul Pester can’t say how many people have left TSB since the crisis began.
TSB boss Paul Pester says he doesn't know how many customers have left the bank as a result of 10 days of online banking and app problems
— Joanna Partridge (@JoannaPartridge) May 2, 2018
And the committee’s obvious amazement, Paul Pester thinks TSB can still win new customers in the weeks and months ahead.
Nicky Morgan picks her jaw off the floor, and lashes Pester for simply not understanding the impact of this crisis:
Do you recognise the reputational damage that this has caused, not just to TSB but to online banking generally?
The UK needs TSB to be a challenger to the big five banks, Pester insists.
Your customers need TSB to provide a good banking service, Morgan shoots back.
Pester tried to pay tribute to TSB’s thousands of hard working staff, saying he’s confidence that his ‘partners’ can persuade customers to move to TSB in the future.
Those partners have been badly let down by senior management, Morgan retorts.
Quite.
The more this TSB hearing goes on, the more you see the disconnect between what their CEO believes (the system's now working well, people can get in touch if they have any issues) and the reality the MPs are telling them how their constituents are struggling
— Chris Applegate (@chrisapplegate) May 2, 2018
Updated
TSB CEO accused of 'staggering' attitude to crisis
Pester says customers should use TSB’s online complaint form to get in touch, rather than trying to phone or using social media to report problems.
Everyone enjoys tweeting, but it is ‘shouting into the void’, TSB’s CEO adds.
Nicky Morgan won’t stand for this, pointing out that TSB’s own Twitter account says people should phone.
They can phone if they prefer, Pester replies.
After 90 minutes of evidence, Morgan has heard enough - and lays into Pester:
What we are hearing this afternoon is the most staggering example of a chief executive who seems unwilling to realise the scale of the problem that is being faced.
Saying that social media is ‘shouting into the void’ doesn’t show much inclination to being a truly digital online presence, she adds firmly.
Updated
Simon Clarke MP brings up the case of a third constituent, whose business is threatened because he can’t access his banking services.
Pester sounds concerned, but he is also insistent that most of TSB’s services are working well. Millions of customers are using their bank cards every day, he says.
There’s clearly a disconnect here -- MPs (and the media) are hearing from people in a real fix, but TSB thinks problems are intermittent.
Q: What is the quantum of the compensation bill?
Pester sways away from this one, playing the “we’ve been so focused fixing the problems that we haven’t calculated it” card.
Conservative Simon Clarke MP now challenges Pester, citing the case of a constituent called Kerry.
She has been stuck on telephone lines, paying 50p per minute. She relies on pensions credit, and is at her “wits end” with her gas about to be cut off.
Q: who should she contact to resolve this today?
Pester apologises to Kerry, and says that TSB wants to deal with complaints. Again, he encourages customers to get in touch with their problems.
He also reveals that the bank is using ‘artificial intelligence’ to find vulnerable customers.
(I’m glad to see there’s some intelligence involved in this mess).
Clarke then cites another customer - Alison Wickes, who lost a non-returnable deposit on a car because she couldn’t get the money to buy it out of TSB, and the dealer sold it to someone else.
More reaction from irate customers....
@NickyMorgan01 Please can you reiterate to Paul Pester that #TSB customers are not being replied to online, we not able to get through to someone at a call centre, many details are still missing or incorrect from my personal accounts. What can I do about it??!!
— Melissa Galvan (@Melige_Foster) May 2, 2018
@NickyMorgan01 Mr Pester is suggesting it's the customers who are choosing to hang up if they can't get through. If he took the time to look at feedback on TSBs Facebook and Twitter, he would see that the TSB telephony system is throwing people off after a period of time.
— Michael Thurlow (@michael_thurlow) May 2, 2018
...and unimpressed journalists:
TSB. This is a car crash. Pester now saying he's "disappointed" with the "abandon rate". ie customers hanging up when they can't get through. Wait time is 30 mins apparently
— Patrick Hosking (@HoskingTheTimes) May 2, 2018
The last time I saw a major car crash of a TSC hearing and thought "He really doesn't get it" was when Bob Diamond said that "the time for apologies is over". TSB CEO Paul Pester is doing even worse in front of the TSC than Bob.
— Geoff Ho (@FinanceHog) May 2, 2018
Q: Has this shambles, or meltdown, put customers at risk of fraud?
Based on experience, we know that fraudsters will be following the news, following social media and will take any opportunity to take advantage, Pester replies. That’s why TSB wrote to customers this week warning them to be careful.
Q: Will there be any legal action over this mess?
Sabadell’s Miquel Montes says not.
But....TSB’s chairman is more circumspect. Richard Meddings says it all depends on Slaughter and May’s independent review:
How interesting. Chairman of TSB has just failed to rule out legal action against Sabadell (Spanish parent bank). “There will be an independent review and we will act on that”.
— Joel Hills (@ITVJoel) May 2, 2018
Updated
Lots of squirming from #TSB bosses when pushed on when the “shambles” will be over. “I can’t give you a date” says @PaulPester “because I don’t want to mislead customers”
— Danni Hewson (@dannihewson) May 2, 2018
TSB can't say when crisis will be over
Q: When will this shambles be over, asks John Mann
Meddings says TSB is seeing “improvement” on its online services, and across its other channels.
But it’s still not good enough”.
The wrong thing to do would be to set a date, Meddings claims -- but “we are working as hard and as fast as we can”.
Q: Can you do better, Mr Pester?
I can’t give a fixed date, Pester replies. If I give one it’s likely to be unfair to customers, he adds.
Q: This week, next week, the week after next?
Pester won’t be drawn.
Mann turns in exasperation to Sabadell’s COO, Miguel Montes....
We are very close, Montes replies.
Q: That sound like days. Could it be days?
Hopefully yes, Montes replies cautiously [and not very convincingly, I fear].
John Mann turns to the issue of compensation, and the case of a TSB customer whose wedding planning thanks to the IT chaos.
Q: How will TSB make things right?
Meddings says TSB don’t simply use a ‘financial calculation’ when assessing compensation. It will also take stress and inconvenience into account.
Deloitte are helping TSB to draw up a framework to help deal with compensation claims, Meddings explains
Q: What if customers aren’t satisfied?
They could consider appealing to a financial onbudsman, Meddings suggests.
TSB CEO to give up bonus for IT migration (but....)
Mann turns his guns to chairman Richard Medding about the “shambles” at TSB.
The only similar mess I can remember in my time on this committee is the Co-op Bank, says Mann. They lost their chief executive and chairman - are you going to lose yours too?
No, Medding replies.
Q: What about Mr Pester’s bonuses?
Boom! Meddings reveals that Pester has offered to give up the bonus related to the successful migration of the IT system. That’s the right thing to do, Meddings adds.
Q: So, no bonus for Mr Pester this year?
It’s not as simple as that. A decision over his total pay and bonus package will be taken at the end of the year, once the review into the IT project has been concluded, Meddings explains.
Paul Pester has offered to forfeit a £1.6m bonus linked to TSB's migration to a new IT system, the bank's chairman Richard Meddings tells the Treasury committee, after the disaster that left thousands of customers with no access to accounts.
— Rob Davies (@ByRobDavies) May 2, 2018
Now it’s Labour MP John Mann’s turn.
Q: How many SMEs have had problems?
Pester doesn’t know (again, not a good look).
In percentage terms it’s similar to the wider average (where around 50% of customers couldn’t get online at any one time), he says.
Q: How many customers have had problems speaking to your telephone helpline?
We’ve been very disappointed with the abandon rate --
Q:...with WHAT?!, Mann interjects.
....These are customers who decide not to wait, Pester explains
Q: How long are you making them wait?
The average wait time is 30 minutes, Pester says, it hasn’t improved in recent days.
[But as MPs realise, this wait time doesn’t customers whose patience hits breaking point and hang up after a lengthy wait]
Pester says that IBM experts are helping to fix the IT issues....but if it was a simple problem, we would have fixed it, he adds.
Another tale of TSB woe
Stuart Hosie now challenges Paul Pester over his claim that most of the bank is running smoothly.
One of Hosie’s constituents found that his standing orders had bounced yesterday (a problem TSB claims to have fixed).
A second customer has an even more worrying story - he tried to pay seven cheques into his local branch, but the staff couldn’t make the system work.
He tried to access his balance on another account, Hosie continues, and staff couldn’t get into it. This customer has been locked out of their business account since 20 April, and their complaint hasn’t even been responded to.
Fixing Pester with a steely look, Hosie declares:
It isn’t just the online, it isn’t just the digital, it’s the technology in the branch [too], and the complaints aren’t being addressed, are they?
Pester says TSB have responded to 22,290 of the 40,000 complaints received since the IT migration. It is in the process of dealing with the rest, and he apologises to this constituent.
SNP MP Stuart Hosie asks if Pester understands the importance of digital services today, when a broken app is as bad as a closed branch.
Pester agrees. He says TSB’s busiest time is typically between 7.30am and 8.30am, as customers check balances over breakfast or on the way to work.
Q: So why weren’t you ready for the demand when you brought your services back online (on Sunday night, April 22nd)?
Pester says the bank had assumed very high usage of its telephone services, the internet banking, and its mobile app. TSB thought that it was ready -- Slaughter and May’s independent review has to discover why it wasn’t.
Nicky Morgan has more inside information from TSB - a worker who says they weren’t actually allowed to fail things in testing, only say they had passed or need more work.
Pester says TSB’s testing operation will be examined as part of its review.
Q: And why are people who closed accounts years ago now getting texts? Did you move too much data?
Pester says TSB has to hold customer data for seven years.
Q: Was your bonus contingent on getting this migration done now, Mr Pester?
Pester denies it. He says there was a “reward” for getting the operation done, but not at a particular time.
[Background: in February, TSB’s board decided to withholding a potential £1 million-plus payment for Pester until the bank completed its delayed IT improvements.]
so far it is a fairly complacent and arrogant performance from the TSB duo; seem to think only 40,000 customer complaints in 10 days is not a major issue. Have not mentioned that punters still cannot rely on TSB faster payments to function https://t.co/B9XdWFz8qd
— Douglas Blakey (@DouglasBlakey) May 2, 2018
How anyone can think of staying with TSB after watching this grilling.https://t.co/vEwDHJa19d#tsb #rip
— Nathan Martin (@shaggy_nath) May 2, 2018
Updated
Rushanara Ali turns to Sabadell’s COO, Miquel Montes.
Q: Would this migration have saved £100m per year? (on fees paid to Lloyds?)
Montes confirms that this is the case
Q: Did you speed the migration up because there was a financial benefit?
Montes denies it. All decisions taken by the TSB board have been backed by Sabadell, he says.
Q: So there was no pressure on TSB to move quickly?
Pester jumps in, saying there was no pressure from TSB’s parent company.
Q: So why didn’t the migration work?
Pester says he’s handled several migrations before - including bringing Alliance & Leicester and Bradford & Bingley onto Santander (following the financial crisis) and carving TSB out of Lloyds. Subtext: he knew what he was doing....
Now chairman Richard Meddings chips in - he confirms that TSB have called legal firm Slaughter & May in to carry out a review. He’s happy to share the conclusions with MPs when it’s done.
Labour MP Rushanara Ali takes issue with Pester’s claim that TSB customers should get in touch with problems.
She points out that customers have suffered long delays on its helplines, or lengthy journeys to their nearest bank.
Q: What have the bank done to help?
Pester says the bank have prioritised vulnerable customers, and also searched social media to find customers affected.
Ali isn’t impressed, saying that the tone of TSB’s response hasn’t been good enough.
Pester isn’t winning his audience over, judging by these tweets from watching journalists:
If you want a masterclass in how not to handle a Parliamentary evidence session tune in now to @PaulPester speaking to the Treasury Committee https://t.co/WqMyclYnQ5
— Harry Wilson (@harrynwilson) May 2, 2018
Huge groan from the team here as @PaulPester responds to the fact people in the cttee room are failing to log into online banking during the hearing by thanking so many of them for being customers! #TSB
— Danni Hewson (@dannihewson) May 2, 2018
Paul Pester says he has data showing him that almost all customers are getting online - but a cursory Twitter search shows that’s simply not the case. The idea that TSB is load-limiting the amount of customers that can log on seems bizarre - they will have acres of data on usage.
— Nick Stylianou (@nmsonline) May 2, 2018
Someone needs to tell TSB CEO Paul Pester to stop saying that the IT migration went smoothly. And that joking about not knowing home many customers he had in the room is ill advised. Makes him look like a smug jack***.
— Geoff Ho (@FinanceHog) May 2, 2018
CEO Paul Pester is trying to persuade the Treasury committee that the situation isn’t that bad really.
The engine of the bank is running smoothly, the issue is handling enough customers trying to log on simultaneously, particularly through our app and our digital channels.
But Nicky Morgan has another trump card - a second member of the committee now can’t into their TSB account.
It’s great to have so many customers, grins Pester (ill-advisedly, I think).
“Thank you very much for using TSB”
Morgan shoots back that it’s not clear how much longer they’ll actually be TSB customers.
TSB has had 40,000 complaints
Q: Hasn’t this IT migration been a complete failure, asks Charlie Elphicke MP.
It’s not been a complete failure, Paul Pester insists - sticking to his earlier argument that much of the migration went smoothly (it’s just that lots of customers couldn’t actually do any banking).
Pester reveals that TSB has received 40,000 complaints since the migration (on April 20-22nd). It would normally receive 3,000 over the same period.
They are being investigated, and they will be put right.
Updated
Charlie Elphicke MP takes up the cudgel, asking about TSB’s senior management regime - and who take responsibility for this mess?
Q: Who does the buck stop with?
It stops with me, says Pester.
Q: So you take responsibility?
I take absolutely responsibility,
Q: Have you failed in the basic duty to customers?
Pester says he is proud of TSB’s work since it was spun out of Lloyds in 2013.
I’m deeply sad that the good work of the last five years has been so damaged over the last 10 days, Pester continues, but we will come back.
Q: But how can your customers ever trust you again, Mr Pester?
Because I will ensure that we get TSB out of these problems, and that no customers end up out of pocket.
A TSB customer has tweeted the committee about the irony of watching Paul Pester saying there are no problems logging into TSB, while “simultaneously trying and failing to log into my account”.
How can you say that this migration went smoothly? Nicky Morgan asks.
Paul Pester says he has data showing him that almost all customers are getting online,. If people are struggling, please contact us, he says.
[That won’t cut much ice with customers who have reported long delays on its telephone line]
Nicky Morgan plays her trump card -- one of the committee’s own staff are trying to log in, and they can’t log in either.
Nicky Morgan asks about another case, about a TSB customer who says they were let down by the bank, and has subsequently passed away.
In response, chairman Richard Meddings also apologises for the IT migration failures.
Watching the @TSB Chief Exec tell the Parliamentary Committee that customers can log on as normal to their accounts. Simultaneously trying and failing to log into my account pic.twitter.com/IJkgnWjYqC
— Peter Savage (@pcsavage) May 2, 2018
The #TSB boss is advising customers to get in touch for help. That’s despite customers reporting long hours hanging on helplines. Responding to emails from customers read out by the cttee @PaulPester says “I don’t recognise the situation you are talking about”
— Danni Hewson (@dannihewson) May 2, 2018
Nicky Morgan says Pester is downplaying the problems at TSB.
She quotes an email from a TSB customer who has suffered disruption for the last two weeks.
This person has seen their balance fluctuate, been unable to withdraw cash, and with no idea if their data has been compromised. How is someone supposed to cope without banking services for two weeks? Could Paul Pester cope?
Nicky Morgan says she got email this morning from TSB customer who hasnt been able to access their account or use their debit card for a fortnight - 'ask him (Paul Pester) how much cash he carries and how he'd manage' #TSB
— Rachel Kennedy (@rachelkennedy84) May 2, 2018
Pester says he doesn’t recognise this situation. He says that there have been problems getting enough customers online at the same time, but that around 50% of customers who tried to log in, were able to at anyone time.
Morgan isn’t impressed - are you saying this customer isn’t telling the truth?
There’s no group of customers who haven’t been able to log in since the migration, Pester insists.
Morgan cites another email, from a TSB customer who hasn’t been able to buy a house as they can’t access three months of bank statement?
Isn’t it complacent to say that this migration went well, when people are not in control of their bank accounts?
Updated
TSB session begins, with an apology.
The session is underway.
Committee chair Nicky Morgan begins by quoting TSB’s ambition to become “a digital business that just happens to be a bank”. Isn’t the truth that it is actually a broken bank?
CEO Paul Pester begins by apologising for the disruption suffered by customers since the IT migration last month, saying he is truly sorry.
But he insists that much of the migration worked well - balances were accurately transferred “to the penny” and the underlying engine of the bank is running relatively smoothly
But, the platform’s ability to allow enough people to log in at the same time hasn’t worked well enough - preventing some customers from using its internet banking service and mobile app.
That has led to an unacceptable experience for some customer, Pester says, apologising again.
While we wait for the hearing to begin, here’s our latest news story on TSB....
The Treasury committee hearing on TSB’s IT problems is due to start in five minutes.
The witnesses are TSB chief executive Paul Pester and chairman Richard Meddings, plus Miquel Montes, chief operating officer of Sabadell Group (TSB’s parent company).
It should be streamed live here.
You can watch this session live at 2.30pm here: https://t.co/R7YtGbRSfm https://t.co/LL7VRaisH8
— Treasury Committee (@CommonsTreasury) May 2, 2018
Good to see @NickyMorgan01 ask the Prime Minister about TSB and the impact it could have on businesses ahead of Treasury select committee questioning this afternoon. #PMQs pic.twitter.com/2ANpWlJrFT
— FSB (@fsb_policy) May 2, 2018
Back in the 1980s, TSB billed itself as “The Bank That Likes to Say Yes”, in a series of jaunty adverts:
Satirical magazine Private Eye have now helpfully updated the slogan for today’s circumstances:
Private Eye on #TSB pic.twitter.com/25SARoqU5S
— simon read (@simonnread) May 2, 2018
Theresa May: We must get to the bottom of the TSB crisis
TSB’s IT meltdown crisis has reared its head at Prime Minister’s Questions.
Nicky Morgan MP, chair of the Treasury committee, tells the House of Commons that the crisis has had very severe consequences for thousands of customers.
It is unfair to businesses, to vulnerable customers, and it is particularly unfair when banks are closing branches, Morgan says (giving TSB a taste of this afternoon’s grilling).
Does the prime minister agree that “a robust and reliable banking IT infrastructure” is essential in the modern economy.
Theres May says she certainly does agree that a “robust, safe and reliable” IT system is essential to underpin modern banking.
She’s sure the Treasury Committee will get to the bottom of what went wrong at TSB, starting with today’s hearing.
Another question for MPs: why has TSB’s board called in a top UK law firm, Slaughter & May?
Sky News’s Mark Kleinman has more details:
Sky News has learnt that directors of the UK’s sixth-biggest bank have asked Slaughter & May to conduct an independent probe of the circumstances leading to the IT upgrade which has prompted a furious backlash from thousands of customers.
The appointment of Slaughters, one of the so-called “Magic Circle” law firms, has been rubber-stamped by TSB’s board and is expected to be confirmed by directors when they appear in front of MPs on the Treasury Select Committee later on Wednesday.
Exclusive: TSB board hires City law firm Slaughter & May to lead investigation into IT meltdown at Britain's sixth-biggest bank. https://t.co/gJam0n0izj
— Mark Kleinman (@MarkKleinmanSky) May 2, 2018
MPs on the Treasury committee could also ask TSB about the weird and less-than-wonderful state of its online banking site.
Technology expert Chris Applegate took a look under the bonnet yesterday, and recoiled after uncovering a host of errors and questionable coding work.
Ok so I just looked at the source code for the @TSB online banking login page and I am screaming. The running up and down the walls kind
— Chris Applegate (@chrisapplegate) May 1, 2018
Some of the errors suggest that stressed techies are making basic mistakes as they race to get TSB’s banking services online again.
Also... the site’s security certificate - used to secure credit card transactions and log-in details - will soon be out of date. Not a good sign at all.
First off, there's an error in the console because the domain "https://t.co/fssdJYZlDX.tsb" doesn't resolve. Which, judging from the structure, is an internal testing domain. On production! pic.twitter.com/NWxvowBjhY
— Chris Applegate (@chrisapplegate) May 1, 2018
Another script does load, but it has syntax errors pic.twitter.com/zxl7XNVWFa
— Chris Applegate (@chrisapplegate) May 1, 2018
Also there's a ton of SSL warnings, because the certificate they're using is soon going to be disregarded by Google as safe. Which is not mega-reassuring from, y'know, a bank pic.twitter.com/KoGwTxnRq6
— Chris Applegate (@chrisapplegate) May 1, 2018
The very first bit of JavaScript on the page, which works out the domain you are on and sets a cookie, manages to mis-spell the attribute "length". No, really pic.twitter.com/eH48KdhrGA
— Chris Applegate (@chrisapplegate) May 1, 2018
This is TSB’s front-end code, for the pages seen by customers, rather than the digital nuts and bolts underpinning the bank. But it’s still not a reassuring sight.
Updated
UK beaten in growth race by US and eurozone
Oof! Britain’s economy is suffering its worst run against the US and the eurozone in 12 years.
So says Barret Kupelian, senior economist at PwC. He has crunched today’s eurozone GDP figures (see 10.12am) and compared them to last Friday’s growth data for Britain and America.
And as you can see, Britain’s annual growth rate started dipping at the end of 2016 -- the year of the EU referendum:
It’s particularly disappointing as the wider global economy has been enjoying decent growth of late, as Kupelian explains:
“Today’s flash estimate of Eurozone GDP growth for the first quarter of 2018 shows that the bloc as a whole grew by 0.4% quarter-on-quarter. This is broadly in line with expectations but slower than the 0.7% growth rate recorded in Q4 2017. However, these preliminary Eurozone figures are likely to be revised once national authorities release their data.
“This was the fifth out of seven consecutive quarters that the Eurozone grew faster than the UK following the EU referendum. This suggests that the UK has not been able to reap the full benefits of an upturn in global economic activity unlike other large economies like the Eurozone and the US.
“This now means that the UK has been the slowest growing economy relative to the US and the Eurozone for the fourth consecutive quarter - something last experienced 12 years ago.
Economist Rupert Seggins has also shown how Britain is lagging behind:
Latest economic growth scores on the doors (2018 Q1):
— Rupert Seggins (@Rupert_Seggins) May 2, 2018
UK: 1.2%y/y (previously: 1.4%y/y)
US: 2.9%y/y (previously: 2.6%y/y)
Euro Area: 2.5%y/y (previously: 2.8%y/y) pic.twitter.com/XE6nys1ZKl
Several TSB customers are tweeting their unhappiness that the bank has billed them their usual monthly charge, despite the disruption of the last 12 days.
@TSB my account has been deducted today by your monthly fee, this is outrages that after all, you still manage to deduct your monthly fee from my account. Seriously!
— Hoda Davaine (@HodaDavaine) May 2, 2018
Well @tsb you lock me out of the system for a week so I can't access my money but can still manage to charge me the monthly fee today!!!!! What is that for? @PaulPester bonus this year? #tsb #tsbfail
— Richard Otter (@richardotter) May 2, 2018
@TSB “can’t access account properly and services are intermittent and showing incorrect information” but TSB still want to charge a monthly fee for it? Bye bye now. Taking the piss, can’t provide the service but happy to take the money for it
— lynsey (@LynseyMacfadyen) May 2, 2018
Although some of TSB’s current accounts are free, it charges £9.95 per month for its Silver account, and £8.95/month for its ‘select’ option (no longer available).
TSB wrote to customers this week, promised to waive overdraft fees for March and April and promising that no-one will be left ‘out of pocket’.
But still, charging account fees when people haven’t had the usual service clearly rankles with some customers.
Another newsflash: Growth across the eurozone slowed to 0.4% in the first three months of 2018.
That’s down from 0.7% 0.6% in October-December 2017, and highlights how the global economy has softened in recent months.
This also means the eurozone grew faster than Britain - again (as UK GDP only rose by 0.1% during the quarter).
Updated
We’d like to hear from TSB customers who are still suffering from the IT problems. You can get in touch anonymously here.
Back to TSB, and writer Michelle Davies is still having problems with her bank account:
@TSB When is the bank going to be up and running properly? We're missing a not insignificant sum of money that was paid to us by a third party and when I tried to call online banking to sort it out I was hung up on. How can this still be dragging on ten days later????
— Michelle Davies (@M_Davieswrites) May 2, 2018
And they've had the audacity to take this month's £17 account fee from our account this morning. They're charging us for an account we haven't been able to access! #TSBFAIL https://t.co/EpZgQiZCL2
— Michelle Davies (@M_Davieswrites) May 2, 2018
Better news: UK construction sector returned to growth in April, as builders returned to work after the ‘Beast from the East’ disrupted activity in March.
UK Construction PMI bounces back to 52.5 (vs. weather-hit 20-month low of 47.0 in March). More here: https://t.co/zp2lQSK0Gl pic.twitter.com/xnXTQRnt9F
— Markit Economics (@MarkitEconomics) May 2, 2018
A quick economic newsflash: Growth across the eurozone’s factories has slowed to a 13-month low.
Data firm Markit reports that activity across Europe’s manufacturers cooled in April, with growth slowing in the Netherlands, Germany, Italy, Spain and Greece.
It’s due to a drop in new order growth, meaning firms took on fewer new staff.
Firms reported that new order growth slowed last month, as did new hirings, as the strong growth of 2017 fades.
However, at least factories are still expanding. The overall eurozone factory PMI fell to 56.2 in April, from 56.6 in March (any reading over 50 shows growth).
[for comparison, the UK factory PMI fell to 53.9 yesterday, a 17-month low)
TSB: Try turning it off and on again
It’s more than a week since TSB’s chief Paul Pester tweeted that “our mobile banking app and online banking are now up and running”...and yet there are still problems.
The bank’s service status page warns that customers can’t see their mortgage account via internet banking and the mobile app. Some business customers are still struggling to make payments online - which could be disastrous for a firm which needs to pay suppliers or staff.
Replacement debit and credit cards are currently taking a little longer to process too.
If customers can’t get online, TSB recommends they try “closing your mobile app fully and then restarting it, or closing your internet browser and trying again”. Advice straight out of The IT Crowd....
Updated
Reuters: TSB meltdown caused by rushed testing and bad communication
Reuters has also investigated the TBS crisis -- and confirmed that rushed and inadequate testing and poor internal communication were to blame.
Reporter Lawrence White explains:
“There wasn’t time to test everything, digital and mobile payment testing weren’t properly scoped, so it wasn’t a surprise to me when it went live last week and those parts didn’t work,” said one source, a project manager who oversaw people working on the upgrade, referring to the testing up to the first deadline.
A second source, a software tester, said tests were in some cases poorly designed or rushed in order to meet the initial project launch date. He also cited a lack of communication between IT and the business about who was managing the testing.
Why TSB's IT migration went wrong
Some background: TSB’s IT meltdown was created because the bank moved from its old technology at Lloyds Bank (who sold it in 2013) onto a new system created by current owner Sabadell.
Insiders have told us that the team working on the migration were set unrealistically tight deadlines that didn’t acknowledge the challenge of unpicking TSB out of Lloyds’ sprawling network of legacy systems.
My colleague Sam Gibbs wrote about the mess on Saturday:
By the summer of 2016, work on developing the new system was meant to be well under way and December 2017 was set as a hard-and-fast deadline for delivery.
“The time period to develop the new system and migrate TSB over to it was just 18 months,” the insider said. “I thought this was ridiculous. TSB people were saying that Sabadell had done this many times in Spain. But tiny Spanish local banks are not sprawling LBG legacy systems.”
To make matters worse, the Sabadell development team did not have full control – and therefore a full understanding – of the system they were trying to migrate customer data and systems from because Lloyds Banking Group was still the supplier.
“This turned what was a super-hard systems job [into] a clusterfuck in the making,” the insider said.
By March 2017, the nightmare for customers that was going to unfold a year later appeared inevitable. “It was unbelievable – hardly even a prototype or proof of concept, yet it was supposed to be fully tested and working by May before the integration work started,” the insider continued. “Senior staff were furious about the state it was in. Even logging in was problematic.”
MPs must ask Pester why the bank didn’t heed these warning signs, and instead plunged on into the current mess.
Some TSB customers are fuming this morning after it emerged that the bank had failed to execute their standing orders yesterday.
The blunder affected important bills, such as monthly rent payments, set to be paid at the start of the new month.
Scientist Stacey Bell found herself caught up in the mess, when her rent found its way back into her account:
@TSB @TSB_News please can someone answer their phone?! been on hold for over an hour, and still no answer.Then Imhung up on and https://t.co/xHU4FaG0kO have returned my standing order this morning for my rent!Can’t speak to anyone about this so kinda stuck!!!
— stacey bell (@stacbelle) May 1, 2018
TSB says the issue has been fixed - but it has created further anxiety among its customers:
The issue affecting a number of standing orders today has now been resolved and scheduled payments have been processed.
— TSB (@TSB) May 1, 2018
The agenda: TSB to be grilled over IT mess
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Twelve days ago, TSB pressed the button to switch its 5 million customers onto a shiny new IT platform. Later today, the bank’s top brass will try to explain to MPs why they made such a botch of it.
TSB chief executive Paul Pester and chairman Richard Meddings will face parliament’s Treasury committee at 2.30pm today, to answer questions about why millions of customers were locked out of their internet and mobile bank services for days.
They’ll be accompanied by Miquel Montes, chief operating officer of TSB’s parent company, Sabadell, which oversaw the move onto the Proteo4UK platform.
Pester - who took personal control of the mess nearly a week ago - will be quizzed on what exactly went wrong, and why TSB hasn’t been able to get back online.
Was the system tested properly, and why wasn’t there a contingency plan in case gremlins struck? And are customers really going to be properly compensated for their losses, and the inconvenience they have suffered?
We're taking evidence from Paul Pester (CEO, TSB), Richard Meddings (Chairman, TSB), and Miquel Montes (COO, Sabadell). Watch it live on Wednesday at 2.30pm here: https://t.co/R7YtGbRSfm #TSB pic.twitter.com/snWYFjCzm2
— Treasury Committee (@CommonsTreasury) May 1, 2018
My colleague Patrick Collinson has helpfully drawn up a list of questions for the MPs to bang over the net to the trio:
-
Why didn’t the new computer system work? TSB spent, by its own admission, 2,500 human years on the IT transfer from Lloyds, with 1,000 people involved in one way or another. Why did it fail? Did TSB perform thorough testing prior to flicking the switch on the migration of user accounts? Why did the testing not uncover the issues? How thorough can it have been, given issues became apparent almost immediately?
-
Was there a back-up? Sabadell’s takeover of TSB was predicated almost entirely on the £100m savings to be made from cutting TSB free from the £214m-a-year bill it had to pay Lloyds for continuing to run the bank’s accounts. Was it rushed through, without sufficient back-up? Why was the old system not still in place to mitigate customer troubles when it was clear Proteo4UK, the name given to the new platform, was not up to the task?
- Why were customers misinformed? The transition was scheduled from Friday evening to Sunday evening. When failures began appearing, almost immediately afterwards, TSB initially said the problems were only “intermittent”. Early on Wednesday, Pester said the system was “up and running” again but customers continued to report problems.
- Who was in control? Much is being made of a rift between TSB in the UK and Sabadell in Spain. Pictures on LinkedIn showed celebrating IT workers in Madrid toasting the “success” of the transfer. Pester is now paying for IBM specialists to fix the problems. Will Pester pin the blame on head office in Spain or other external contractors?
- Will Pester still receive a £1.6m bonus? He may try to dodge this by saying bonuses are at the discretion of the remuneration committee, and nothing has been decided. But MPs are likely to press Pester on whether he think he deserves a bonus after this fiasco.
- How will TSB compensate customers? The bank has promised that no one will be left out of pocket. But will they receive compensation only if they complain? Will the bankcontact customers? And what does it expect the compensation bill to be?
- Did regulation work? MPs will want to know the extent to which the giant transfer of 1.3bn records was supervised by regulators such as the Financial Conduct Authority, and what it says about the robustness of Britain’s banking infrastructure. TSB will have to tell MPs how far the debacle has exposed customers’ data, and how much, if at all, any accounts have been compromised
Also coming up today
We’ll be wading through a river of data this morning, with new surveys of the eurozone factory sector and Britain’s builders.
We also get the first estimate of eurozone growth in the first quarter of this year. Growth is expected to have slowed to around 0.4%, from 0.6% in the last three months of 2017 - still rather better than Britain’s slothlike 0.1% expansion...
The agenda:
- 9am BST: Eurozone manufacturing PMI survey for April
- 9.30am: UK construction PMI for April
- 10am BST: Eurozone GDP for Q1 2018 (first estimate)
- 2.30pm BST: Treasury committee hearing on TSB’s IT problems
Updated
