LONDON/MADRID :British lender TSB has been fined 48.65 million pounds ($59.1 million) over a botched IT platform migration in 2018 that locked millions of its customers out of their accounts, UK regulators said on Tuesday.
The IT upgrade "immediately experienced technical failures", the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) said, resulting in "significant disruption" to TSB's in-person, online and phone banking services.
The regulators found that TSB failed to organise and control the migration adequately, and failed to manage operational risks from its IT outsourcing setup.
TSB's Spanish owner Sabadell said in a statement that the settlement would be accounted for by TSB in the fourth quarter and estimated an impact of 6 basis points on the group's capital.
It however said that TSB's and Sabadell's insurance policies would offset the impact in the following quarters.
Sabadell's 1.7 billion pound acquisition of TSB in 2015 ran into issues more than four years ago when IT glitches sent costs spiraling.
"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," said Mark Steward, executive director of enforcement and market oversight at the FCA.
TSB was fined 29.75 million pounds by the FCA and 18.9 million pounds by the PRA, receiving a 30 per cent discount by agreeing to settle the issue, the British regulators said.
In a statement, TSB CEO Robin Bulloch apologised to consumers hit by problems during the upgrade.
"We worked hard to put things right for customers then and have since transformed our business," he said. "Over the past four years, we have harnessed our technology to deliver new products and better services for TSB customers."
The report of an investigation published in 2019 found that an IT crash at TSB bank disrupted services for nearly 2 million customers and halved parent Sabadell's profits the previous year was caused by moving to a new banking platform before it had been properly tested.
The fine puts an end to the uncertainty that surrounded TSB in the past and which also forced Sabadell to freeze the sale of its British unit until it completely turned around the business.
In the third quarter, TSB already made a positive contribution to the parent group's results for the seventh consecutive quarter, adding 39 million euros ($41.4 million).
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