Supervisory Statement: Operational resilience: Impact tolerances for important business service.These areas include governance, operational risk management, business continuity planning and the management of outsourced relationships. Although the PRA’s current, overarching operational resilience framework was introduced after the migration incidents (specifically, in 2021), the PRA’s requirements and expectations as regards to managing operational resilience consolidate many long standing and well understood areas of prudential regulation that have formed part of the PRA Rulebook for several years, including during the relevant period under investigation. The PRA’s outsourcing rules during the relevant period under investigation applied specifically to the ‘performance of operational functions which are critical for the performance of relevant services and activities’. PRA Statement of Policy: 'Operational resilience' March 2021.TSB Bank PLC (“TSB”) is regulated by the Prudential Regulation Authority (PRA) for prudential purposes and by the Financial Conduct Authority (FCA) for conduct matters.Without this discount, the FCA and PRA would have imposed a combined financial penalty of £69,500,000 (£42,500,0000 by the FCA and £27,000,000 by the PRA). TSB agreed to resolve this matter with the FCA and PRA qualifying it for a 30% discount in the overall penalty imposed by both regulators. The disruption to continuity of service experienced by TSB during its IT migration fell below the standard we expect banks to meet.' 'The PRA expects firms to manage their operational resilience as well as their financial resilience. Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said: 'The firm failed to plan for the IT migration properly, the governance of the project was insufficiently robust and the firm failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.' 'The failings in this case were widespread and serious which had a real impact on the day-to-day lives of a significant proportion of TSB’s customers, including those who were vulnerable. Mark Steward, FCA Executive Director of Enforcement and Market Oversight said: As demonstrated by this incident, operational disruption can cause wide-ranging harm and it is critically important firms invest in their resilience. Operational resilience is a priority for both the FCA and PRA. However, the regulators’ found that TSB failed to organise and control the IT migration programme adequately, and it failed to manage the operational risks arising from its IT outsourcing arrangements with its critical third-party supplier. Its success was critical to TSB’s ability to provide continuity of critical functions and safety and soundness. TSB’s IT migration programme was an ambitious and complex IT change management programme carrying a high level of operational risk.

TSB has paid £32.7m in redress to customers who suffered detriment. Some customers continued to be affected by some issues and it took until December 2018 for TSB to return to business-as-usual. This resulted in significant disruption to the continuity of TSB’s banking services, including branch, telephone, online and mobile banking.Īll of TSB’s branches and a significant proportion of its 5.2 million customers were affected by the initial issues. While the data itself migrated successfully, the platform immediately experienced technical failures. In April 2018, TSB updated its IT systems and migrated the data for its corporate and customer services on to a new IT platform (the “Migration Programme”).

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