"Senior managers have an essential role to play in ensuring that firms manage and supervise outsourcing effectively."
The PRA has fined Carlos Abarca, former Chief Information Officer of TSB Bank, £81,620 for breaching its Senior Manager Conduct Rules in relation to the failure of the Bank's IT migration programme in 2018.
In April 2018, TSB updated its IT systems and migrated the data for its corporate and customer services on to a new IT platform. While the data itself migrated successfully, the platform immediately experienced technical failures. This resulted in significant disruption to the continuity of TSB’s banking services, including branch, telephone, online and mobile banking.
All of TSB’s branches and a significant proportion of its 5.2 million customers were affected by the initial issues. Some customers continued to be affected by some issues and it took until December 2018 for TSB to return to business-as-usual. TSB has paid £32.7m in redress to customers who suffered detriment.
As CIO of TSB, Abarca had responsibility for TSB complying with the PRA’s outsourcing rules. In particular, he was responsible for TSB’s key outsourcing relationship with its main third-party supplier for the IT migration programme. As part of this, he gave assurance to the TSB Board that the third party, as key supplier, was prepared for migration. However, he failed to ensure that TSB had itself obtained sufficient assurance from the third party before doing so.
Abarca agreed to resolve the matter with the PRA, and therefore qualified for a 30% reduction in the overall fine imposed by the PRA. Without this discount, the financial penalty would have been £116,600.
The latest fine follows on from the enforcement action taken in December 2022 against TSB for operational resilience failings, which resulted in a joint financial penalty of £48,650,000 imposed by the PRA and FCA.
Sam Woods, CEO of the PRA, said: "Senior managers have an essential role to play in ensuring that firms manage and supervise outsourcing effectively. In this case, the PRA has fined Mr Abarca because his management of a key outsourcing relationship fell below the standard we expect."
