TSB – recently dubbed the ‘Truly Shambolic Bank’ by MPs – could be facing a bill of nearly £230m for the IT meltdown which has triggered to a catalogue of data governance disasters as well as hundreds of thousands of disgruntled customers.
Analysts at RBC have pencilled in a further £53m of costs from its tech blunder, in addition to the £176m hit that it was forced to take during the first half of the year. A bill of that size would comfortably dwarf its pre-tax profits of £163m last year.
RBC said that TSB would be plagued by the continuing cost of consultants to help it handle the fallout – including tech giant IBM and accountant Deloitte – and the outlay for hiking interest rates on accounts in an effort to retain customers.
Other expected costs include paying salaries for the extra staff that have been drafted in to handle compensation claims, and an expected fine from the Financial Conduct Authority which has been forecast to be around £18m. However, it does not factor in any potential fine from the Information Commissioner’s Office.
Nicky Morgan, chairman of the Treasury select committee, told The Telegraph that TSB’s review of the fiasco should incorporate scrutiny of the board’s decision and what they knew about the system’s readiness. “The issue of how the IT switch was planned and approved is key to understanding what went wrong,” she said.“It has got to include the board decision and how the non-executives performed their role of scrutinising the executives.”
In June, the bank’s chief executive Paul Pester admit that more than 10,600 alerts of potential fraud had been reported since the issues started in April and that TSB has had more than 90,000 complaints about its online banking problems.
It has also recorded more than 2,200 confirmed fraud attempts, with more than 1,300 customers having money stolen.
Decision Marketing also revealed that the bank leaked the personal details of customers while sending mailshots to those who have complained about the meltdown.
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