08:29, May 02 161 0 theguardian.com

2018-05-02 08:29:04
TSB hires law firm Slaughter and May to investigate IT chaos

The troubled high street bank TSB has hired the “Magic Circle” law firm Slaughter and May to help investigate an IT failure that has left customers without access to their bank accounts for two weeks.

The recruitment of one of the UK’s most prestigious law firms comes as executives from the bank prepare to give evidence to the influential treasury committee about their efforts to fix the problem and the reasons for it.

One of the worst crises in British banking history was triggered by a bungled migration of data from an IT system inherited from Lloyds Banking Group when TSB split off from it in 2013.

The switch was expected to save Sabadell, the Spanish company that now owns TSB, around £100m a year.

Instead, the change led to problems for 1.9m mobile and online banking customers, some of whom have been unable to access their accounts or make payments for nearly two weeks.

The debacle is expected to result in a hefty bill to compensate customers, as well as potential fines by the Financial Conduct Authority, which dispatched a team to TSB to monitor the situation.

Last Thursday, TSB called in experts from IBM and asked them to fix the problems by Saturday. However, customers were still reporting problems accessing their accounts online on Wednesday.

The appointment of Slaughter and May, first reported by Sky News, is expected to be confirmed at the Treasury committee hearing on Wednesday afternoon.

The TSB chief executive, Paul Pester, the chairman, Richard Meddings, and Sabadell’s chief operating officer, Miquel Montes, will face questions from the committee of MPs, which is led by Nicky Morgan, the former minister for education.

Pester is likely to be asked about his £1.6m bonus, due to be paid once the IT migration is complete as well as awards for 30 other senior staff members.

The bank has said the decision on bonuses rests with the remuneration committee of the TSB board and that no decision has been made.

TSB declined to comment on whether it had appointed Slaughter and May. The Guardian has approached the law firm for comment.

Topics