Former CIO of TSB Bank fined £81k by PRA over 2018 IT disruption
The UK’s Prudential Regulatory Authority (PRA) has fined former TSB Bank chief information officer (CIO) Carlos Abarca £81,620 for breaching its senior manager conduct rules, stating he “failed to take reasonable steps to ensure that TSB adequately managed and supervised appropriately its outsourcing arrangement in relation to its 2018 IT migration programme”.
PRA fines former TSB CIO
The latest announcement follows UK regulators fining TSB Bank a total of £48.6 million in December last year over the botched systems migration, citing “operational risk management and governance failures”.
The PRA claims that as CIO of TSB Bank, Abarca failed to comply with its outsourcing rules. It alleges that Abarca did not ensure that TSB had obtained “sufficient assurance” from its chosen third party supplier regarding its preparedness for the migration.
“Senior managers have an essential role to play in ensuring that firms manage and supervise outsourcing effectively,” says Sam Woods, deputy governor for Prudential Regulation and CEO of the PRA.
“In this case, the PRA has fined Mr Abarca because his management of a key outsourcing relationship fell below the standard we expect.”
In April 2018, TSB Bank migrated to a new IT platform. While the data migration was successful, the new platform underwent technical failures, leading to significant disruption in banking operations affecting all of TSB’s branches and a significant number of its 5.2 million customers. TSB Bank paid out £32.7 million to affected customers.
The PRA adds that Abarca has agreed to resolve the matter, qualifying for a 30% reduction in the penalty, which would have otherwise been £116,600.
