Report slams TSB and parent company Sabadell over 2018 IT disaster

TSB accused of lacking common sense in preparations for IT migration

Law firm Slaughter and May have lambasted executives from TSB and parent company Sabadell over the catastrophic core banking migration that locked two million customers out of their accounts in April 2018.

The migration from Lloyds Bank systems to TSB’s new in-house core banking platform Proteo4UK led to money disappearing from customer accounts, halved Sabadell’s 2018 profits, and eventually forced out TSB CEO Paul Pester.

Slaughter and May’s 262-page report, said to have cost £25 million to produce, criticised the TSB board for failing to “fully understand the scope and complexity” of the new IT system and found Sabadell’s IT arm Sabis guilty of failing to test the system on one of the two data centres it relied on.

“TSB did not take necessary steps to assess SABIS’ capability to develop and operate the Proteo4UK platform, and to manage SABIS as an arm’s length and critical supplier,” the report reads.

“The TSB board should have sought independent advice on the Programme as a whole from a suitably qualified, resourced and experienced independent external adviser,” it added.

The law firm also criticised TSB’s strategy to opt for a single event ‘big bang’ migration instead of a gradual, phase by phase implementation, and said the decision to do so was made hastily without proper consideration of the risks at the board level.

In a statement, TSB said it has made “important changes” to its leadership and management structure and taken steps to take directly control IT operations. New chief executive Debbie Crosbie is expected to detail her strategy for the bank next week.

“TSB has evolved to be a better business than the newly created bank which began the migration project,” said Richard Meddings, Chairman of the TSB Board. “With the leadership of Debbie Crosbie as our CEO, we are now well on track to get TSB back to what it does best: serving customers and bringing better choices to UK banking.”

In a statement, ex-CEO Pester defended the TSB Board, arguing that important information was withheld in the build-up to the migration.

“If these findings are right, Sabis rolled the dice by running tests on only one of TSB’s two new data centres and this decision was kept from me and the rest of the TSB board,” Pester said.

“While the TSB board asked a number of pertinent questions regarding the defender plan, there were certain additional, commonsense challenges that the TSB board did not put to the executive (including why it was reasonable to expect that TSB would be ‘migration ready’ only four months later than originally planned, when certain work streams were as much as seven months behind schedule).”