Former TSB CIO fined £81,000 for botched IT migration

The former CIO at TSB Bank has been fined for his involvement in the company’s 2018 IT migration which saw customers locked out of their accounts. 

Carlos Abarca, who led the botched IT migration, was handed an £81,620 fine by the Prudential Regulation Authority (PRA) for failing to take “reasonable steps” to ensure that the bank supervised its outsourcing arrangements with a third party during the project.

An investigation by the PRA found that Abarca “failed to ensure that TSB had obtained sufficient assurance from the third party” that the IT migration could be successfully carried out. 

Abarca was responsible for TSB’s outsourcing relationship with its main third-party supplier for the IT migration program. 

However, the PRA found that the former CIO failed to ensure the third party’s “ability and capacity were adequately assessed on an ongoing basis”.

Similarly, the investigation concluded that Abarca failed to ensure that TSB had obtained “sufficient assurance” over the third party’s readiness to operate the new IT platform.

Sam Woods, deputy governor for Prudential Regulation and CEO at the PRA, said Abarca was found to have breached the PRA’s senior manager conduct rule 2 and that his conduct during the program “fell below the standard” the regulatory body expects.

“Senior managers have an essential role to play in ensuring that firms manage and supervise outsourcing effectively,” Woods said in a statement.

“In this case, the PRA has fined Mr AbarcA because his management of a key outsourcing relationship fell below the standard we expect.”

In its statement, the Bank of England said Abarca agreed to resolve the matter with the PRA, which resulted in a 30% reduction in the overall fine imposed by the PRA. Without this discount, the financial penalty would have been £116,600.

TSB’s botched migration

The April 2018 migration project at TSB had intended to update its IT systems and migrate data for corporate and customer services to Banco Sabadell’s systems as part of a merger.

Although the migration was initially successful, the platform subsequently experienced major technical issues, resulting in significant disruption to TSB banking services. 

In-branch, telephone, online, and mobile banking services were all severely disrupted due to the failed migration, which affected millions of customers. 

Some customers were left without access to banking services until December that year, and the company was forced to pay more than £30 million in compensation to affected customers. 

The incident also prompted regulatory action against the high street bank. In December last year, the Financial Conduct Authority fined TSB £48.65 million. 

This fine marks the first penalty imposed on an individual involved in the failed migration, according to the Bank of England.