London Briefing: TSB’s Paul Pester gets set for second grilling

Angry treasury select committee to drag back CEO over bank’s dire IT failure

TSB branch in London: Paul Pester appeared to inhabit some alternative reality where the bank’s systems weren’t really broken and where more than one million customers were not locked out of their accounts. Photograph: Neil Hall

TSB branch in London: Paul Pester appeared to inhabit some alternative reality where the bank’s systems weren’t really broken and where more than one million customers were not locked out of their accounts. Photograph: Neil Hall

 

Has the embattled chief executive of TSB found time to attend an emergency media-training course since his disastrous appearance at Westminster last month?

We’ll find out on Wednesday when Paul Pester is grilled by MPs for the second time in just over a month on the calamitous IT failure at the challenger bank earlier this year.

Pester’s first appearance at the treasury select committee on May 2nd is widely regarded as a master class in how not to handle questions from angry parliamentarians. Indeed, many observers deemed his performance even worse than that of former Barclays boss Bob Diamond, when he informed astonished committee members back in 2011 that the time for “remorse and apology” for bankers was over.

The main problem with the TSB boss was that he appeared to inhabit some alternative reality where the bank’s systems weren’t really broken, where more than one million customers were not locked out of their accounts and where nobody had missed out on house, holiday or car purchases because they could not access their cash.

But the committee had examples of all the above and gave a graphic real-time demonstration of the scale of the chaos when two staff members attempted – unsuccessfully – to access their TBS accounts even as Pester sat there claiming things were running smoothly.

Ill-judged humour

His response: “It’s nice to see we’ve got so many TSB customers in the room. Thanks for banking with us” has to go down as one of the most ill-judged attempts at humour from a boss whose job is clearly on the line.

Media training or not, there will be little opportunity for levity at Wednesday’s session. Last time, Pester was unable to say when the problems would be fixed, nor was he able to give any guidance on how many businesses had been affected, or how large the bank’s compensation bill might be.

He’s not going to get away with that. More than six weeks on, many TSB customers say they are still locked out of their accounts and report long waits to get through to helplines. Customers logging in to the bank’s website are still being greeted with the message “We’re working to put things right” along with a helpline number – and a warning that lines are busier than usual.

Fraudsters are using the cover of the chaos to target TSB account holders, with numerous incidences of bogus texts, emails and telephone calls. Stressed TSB employees are feeling the impact too, with reports of a large number of defections to other banks. There’s been no information yet about how many customers have closed their accounts.

Pester will clearly be anticipating a rough ride but he was given a taste of just how tough his grilling will be in the form of an exchange of letters between Nicky Morgan and the City regulator, the Financial Conduct Authority.

Botched IT job

In the letters, released on Wednesday morning, FCA head Andrew Bailey – who will also be attending the session – takes the unusual step of publicly criticising the TSB boss for his over-optimistic spin on the botched IT job. He also suggests that Pester had more detail on the extent of the systems failure that he could, and should, have shared with the committee in May.

Morgan, meanwhile, has piled on the pressure by saying she remains “deeply concerned” about the “quality and accuracy” of the evidence provided to the committee by Pester.

The TSB boss may have taken some comfort on Tuesday when Tesco Bank was hit by its own IT glitch, leaving customers unable to access their accounts online or via mobile phone. They were still able to use their cards, however, and normal service was restored within five hours.

A systems failure at Visa last Friday also caused widespread disruption in the UK – where it processes a third of all spending – and across Europe as customers were unable to use their cards to pay for transactions.

Morgan has written to Visa Europe boss Charlotte Hogg, demanding to know when the company first became aware of the failure, how many cards were affected, and whether customers will be compensated.

If she’s not satisfied with the answers, Morgan says she’ll be calling Hogg, a former deputy governor of the Bank of England, to appear before the committee too.

The credit card company has said the meltdown was triggered by a hardware failure but has given no detail. The joke doing the rounds in the City is that Visa made the mistake of calling in Mr Pester to advise on IT.

Fiona Walsh is business editor of theguardian.com

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