FCA fines TSB £48.65 million operational resilience lapses

The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have issued a monetary penalty on fined TSB Bank plc operational risk management and governance omissions. The company was fined £48,650,000 for its operational failures.

According to the official announcement, TSB updated its IT systems and migrated the data for its corporate and customer services on to a new IT platform in April 2018. The data itself was transferred successfully, however the new platform experienced technical issues. This caused a disruption to the company’s banking services, including branch, telephone, online and mobile banking.

The platform malfunction initially impacted a significant proportion of its 5.2 million customers, however some customers continued to be affected by some issues until December 2018. The FCA noted that TSB paid £32.7 million in redress to affected customers.

The FCA

TSB’s IT migration plan was ambitious and complex, carrying a high level of risk. The FCA noted that the company failed to organise and control the migration process adequately.

Both agencies, the FCA and PRA prioritise operational resilience.

Mark Steward, FCA Executive Director of Enforcement and Market Oversight said:

The failings in this case were widespread and serious which had a real impact on the day-to-day lives of a significant proportion of TSB’s customers, including those who were vulnerable.

The firm failed to plan for the IT migration properly, the governance of the project was insufficiently robust and the firm failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.

Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said:

The PRA expects firms to manage their operational resilience as well as their financial resilience. The disruption to continuity of service experienced by TSB during its IT migration fell below the standard we expect banks to meet.

The FCA fined TSB £29,750,000 and PRA penalised the company with a £18,900,000 penalty. The official announcement noted that the company agreed to resolve the issue and qualified for a 30% discount in the monetary penalty which otherwise would have reached £69.5 million.

Earlier in December, FCA fined Metro Bank PLC £10 million for compliance failures.

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