Why Are So Few Customers Leaving TSB Bank Despite 21 Weeks of Mayhem?

The botched IT migration is still dogging customers of the UK lender.

By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.

After months of self-inflicted IT chaos at mid-sized UK lender TSB, caused by botched data migration to a new IT system in April, things were supposed to have returned to some semblance of normality by now. But new problems keep cropping up. And once again, customers are feeling the brunt of the financial pain and inconvenience.

Last Wednesday, TSB’s online banking system crashed again, albeit briefly. Two days later, the bank was forced to issue yet another apology to customers, this time for failing to send out debit card replacements to about 40,000 account-holders whose cards are due to expire on August 31. TSB has been scrambling to dispatch new cards. But thousands of customers are unsure they will have a usable debit card by Friday.

This week began in ominous fashion, with an announcement from TSB that it was delaying a long-planned transfer of millions of customers from Visa debit cards on to Mastercard. The “big-bang” migration was scheduled to take place later this year, but instead has been pushed back until 2019. A person close to Mastercard told FT that the debit card delay was likely to have costs for TSB.

TSB’s IT fiasco, now in its 21st week, has already cost its parent bank, Spain’s Banco Sabadell, €203 million in losses, which included €40 million from fraud losses and €92 million to cover future customer claims.

This is likely to be just the tip of a very large iceberg. A source close to the matter recently told WOLF STREET that IBM, the external contractor hired by Sabadell to resolve TSB’s IT problems, had estimated that the cost of rectifying the issues and accounting errors could reach as high as £955 million ($1.16 billion). This excluded fraud-related issues as they are not regarded as being part of IBM’s remit, and are being treated as a normal banking function of fraud prevention.

However much the final bill comes to for Sabadell, one thing that’s clear is that TSB customers are already paying a high price for sticking with the bank. In the immediate wake of the botched data migration, over two million customers were locked out of their online accounts. Some people lost out financially, or experienced severe stress. Business customers were unable to pay bills or make payroll and mortgage payments were missed.

Over 1,300 customers have become victims of fraud attacks. When TSB sent out letters to customers apologizing for the problems it had caused, it managed to mess even that up, by enclosing correspondence intended for other customers, in the process breaking the EU’s new data protection laws.

Even now, 21 weeks after the initial IT “upgrade”, serious data issues abound. As FTAdviser reported, a growing number of customers are discovering that their credit scores have also been hurt by TSB’s failings. One customer said that on contacting her credit agency in August, she was told her credit score had dropped 86 points in one month, pushing it from ‘good’ to ‘fair’.

She was then informed that her current account provider, TSB, had failed to update her status since April, the month the meltdown began. Banks and other credit-linked entities typically update agencies on a customer’s credit status on a monthly basis, but as a result of its IT issues earlier this year, TSB has not updated its customer credit files with credit agencies Equifax, Experian and Call Credit. As a result, customers could find it harder to access credit from other institutions.

Yet most customers continue to stick with TSB regardless. In the direct aftermath of the bank’s IT meltdown some customers did vote with their feet by moving their money elsewhere. Rival lenders reported a sharp rise in the number of customers joining them from TSB, as droves of irked depositors abandoned the beleaguered bank.

But according to TSB, in the second quarter — i.e. at the height of the mayhem — it suffered a net loss of just 6,000 customers: some 26,000 customers moved their account away from TSB, but over 20,000 customers opened a new bank account or switched to TSB. In the first quarter, before all the problems began, the net loss of customer accounts, at 5,126, was nearly as large  as the net loss during the IT-mayhem second quarter.

The figures for the second quarter may be hard to fathom — in particular the influx of 20,000 new arrivals during peak IT mayhem — they’re not beyond the realms of possibility. After all, if the last ten years of post-crisis hangover have proven anything, it is that bank customers will put up with no end of poor service, abuse and even outright criminality before they even begin to think about moving their accounts.

There are many reasons why dissatisfied customers decide not to switch banks. One is the widely held perception that they’re all as bad as any other. Another is the fear that chaos will ensue, as direct debits are mauled and incoming payments go missing. In reality, the switching service takes on all the hassle and almost 99% of switches in the UK are completed within a week.

In the case of TSB, however, its customers were already facing financial turmoil as their lender of choice (in most cases) struggled to provide even the most basic banking services. As such, one might have assumed, as we did in May, that their unwavering loyalty to that lender might finally snap. But apparently not.

Even with new regulations making it much easier to move accounts between lenders, there has been no mass exodus of TSB customers. For TSB — and by extension, Sabadell — the unbridled loyalty (or chronic apathy) of its customer base is manna from heaven. But if the current problems affecting the bank are not resolved soon, that loyalty could come at a very high price for its customers. By Don Quijones.

Banks are curtailing “cash services.” But why? Read…  Why Are ATMs Disappearing at an Alarming Rate after a Wave of Branch Closures?

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  34 comments for “Why Are So Few Customers Leaving TSB Bank Despite 21 Weeks of Mayhem?

  1. Jarhead John says:

    Of all the banks in all the towns in all the world…..The UK has TSB, while the USA has WFC.

    • blindfaith says:

      Yes and the customers of both are to lazy to do a thing about the abuse.

      You would think the customers of Wells are waiting, anxiously, for the next round of whippings and beatings.

      • Yes, in the US we have Wells Fargo, and specifically my company has their 401k plan with WFC. I refuse to participate, but my colleague is rushing to get out ASAP. I think my company is clueless about WFC and its crimal activities

  2. Mean Chicken says:

    Is it becoming obvious banks are capable of surviving the worst of disasters when authorities will them to? WFC is another example and I’m sure there are more.

  3. Unamused says:

    -> . . . over 20,000 customers opened a new bank account or switched to TSB.

    How does the old saying go? Something something rush in where angels fear to tread. Fools! That’s it!

    ->Why Are So Few Customers Leaving TSB Bank, Despite Months of IT Mayhem?

    Mass control techniques have succeeded beyond the dreams of avarice. People have been trained to take everything for granted, believing that
    Big Brother is benevolent and competent. And that’s just for starters, because it’s a very good question with very many answers, most of them valid and all of them uncomplementary. Excellent books have been written about the fine points of getting people to fall into ruts and stay there, but naturally the victims don’t read them. They’re too busy doing social media stuff and cultivating personal eccentricities. Not to put too fine a point on it, customers of TSB deserve whatever happens to them.

    The sheeple have spoken, and they have said “Baa-aa”.

    • Juanfo says:

      I would replace “trained” with “indoctrinated” and “social media” with instagram, porn.
      Personal eccentricities I laughed my f @** litterally off the bar stool

    • Javert Chip says:

      -> . . . over 20,000 customers opened a new bank account or switched to TSB.

      Good example of rats swimming toward a sinking ship.

  4. Patricia Trudgeon says:

    TSB (Trustee Savings Bank) was first acquired by Lloyds in 1999. Although not as botchy as with Sabadell, the acquisition of a building society proved to be a far more difficult affair than Lloyds had envisaged. TSB customers had brought the cash to Lloyds but there were in general less sophisticated customers. Few of my TSB customers had debit cards let alone credit cards and the purpose of opening an account at a building society was to save money, not to spend it. That may explain why even today, few TSB customers have bothered to switch. They are worried about what would happened to their money. They would rather wait to make sure all is fixed, compensation is paid and then maybe only a few will switch.

    • Mary says:

      Some explanation of the British banking system would help. Are the customer accounts at TSB what Americans would understand as checking accounts? Because if it’s the account you use every day, then the bank’s problems would be causing you a world of pain, and it would seem the height of apathy not to switch banks. But if these are basically just savings accounts, then a wait and see attitude makes more sense.

  5. Frederick says:

    Wells Fargo and Goldman Sucks come to mind Wasn’t it GS that called their clients stupid cattle or something like that and basically belittled them for being so naive?Yup I thought so Personally I would never do business with such a group of psychopaths but I guess that’s just me

    • JungleJim says:

      Frederick, it isn’t limited to banks, look at “Fakebook”. They stagger from one PR screwup to another. Mark Zuckerberg makes no secret of his scorn for his members, “dumb fucks” I think he called them. And yet, account holders stay with them. People seem to be saying that they don’t care.

      In the Magnificent Seven the head bandito summed things up. “If God didn’t want them sheared He wouldn’t have made them sheep”. He may have been on to something.

    • Buckaroo Banzai says:

      “Wasn’t it GS that called their clients stupid cattle or something like that and basically belittled them for being so naive?”

      I believe that “muppets” is the GS term of art you are looking for.

  6. Juanfo says:

    Banks capture market share undercutting competitors. But instead of using VC money like Sillicon Valley, they use taxpayer money. In this case the Spanish citizen is the figurative litteral superlative bottled genie. Jjj brilliant I bow in worship at our corporate overlord’s feet. Looking forward to what SJakaDD and VDxtR have to say about this WR, DQ, MC01 |m|

  7. Wendy says:

    Ric Edelman, on his weekly radio show, has repeatedly been amazed as to how few customers have left Wells Fargo, even after blatant, and criminal, abuses of its customers. The CEO resigned, millions of fines have been paid, and additional fraud continues to be uncovered, but relatively few customers have left. Even though switching banks is relatively easy, it is still a hassle, so many remain. Some of this can be attributed to stupidity, but a lot of it is just related to inertia, and perhaps an example of the psychological phenomenon of learned helplessness, where dogs were placed on a mild electric shock grid in a cage, but when the cage was removed, the animals didn’t try to escape by stepping off the grid. They just stood there taking the pain. Hey, no worries, Wells Fargo has been “re-established” in 2018, so the shock grid is brand new, and has been unplugged, for now.

    • blindfaith says:

      Warren B’s doing “god’s” work, don’t you know that?

      Fat, sugar, salt, mobile homes, trains, oil, real estate, loans, and more, why who need the boys in Jersey when we have Warren?

    • IdahoPotato says:

      I downgraded my WF portfolio account to a simple checking account. Why didn’t I close it? I do some transfers from overseas. With WF, the money comes directly to the bank. With my credit union (where I do the bulk of my banking), it comes through a third party (Bank of NY Mellon). It incurs higher fees, takes longer and is more difficult to track.

      If anyone has other ideas, I am open to them. I really despise WF.

  8. Lukas says:

    As a TSB customer all I can say is that ther is no alternative really. Maybe only Nationwide but that’s Building Society not a proper bank. TSB is simply the cheapest establishment on the market. They will also bend over backwards to help you in any way. The only shame is that is own by Spanish crap.

    • Javert Chip says:


      “…The only shame is that is own[ed] by Spanish crap….”

      Well, that and stupendous IT incompetence, failure to post debits & credits, easy access for fraudsters, lack of new debit cards, clueless senior management, $1B of upcoming IT repair costs, 21 straight weeks of public humiliation, maybe a couple other things I’ve overlooked (and we’re blaming this on the Spanish?).

      • Lukas says:

        Well I think you should stick to the rule “Believe in nothing what you hear and only half of it what you see” .
        What does incompetence of IT or Managment to my account balance? Nothing! It’s stays the same. I’ve received my new card within 5 days, have access to my money 24/7, yes I couldn’t login to my online account for a week but apart from that everything else was fine. Yes they’ve made a boo boo but who doesn’t? Do you have to look far? Government, NHS, to name but a few. Anywhere you look you will find incompetence. It’s not my problem how they manage their money.

    • jeremias says:

      Imagine what sort of bullshit were that bank that could be bought by those spanish (Despite Sabadell think are not spanish but catalans)
      Lucky british pray next owner would be from Commom Wealth: pakistan or mozambique.

  9. kk says:

    Lots of people work long hours, are looking after children, parents and friends, have to shop for food and clothes, take care of their house and all the rest of living …. they are not fools, they are too busy and changing one useless bank to another useless one is not a high priority.

    • Frederick says:

      So you are saying they are just too busy to avoid taking it up the pooper from their bank ? Got it You May be right Americans rarely get off the couch or out of their oversized vehicle for much of anything of value Therein lies the problem and they will get what’s coming to them shortly

    • Javert Chip says:


      Point taken, but the “new” TSB has yet to demonstrate it can do basic stuff like post debits and credits, or give you an updated ATM card in a timely manner.

      This is like attempting to bank at the public library because it’s open later.

  10. Cynic says:

    Why, man? ‘cos they is fick, innit! :)

  11. desmond says:

    they were queueing out of the door at the local TSB yesterday.. but I guess that was to sort out their new debit cards.. I was gobsmacked that TSB was still in business.. there is no killing these vampires whilst the elite keep feeding us to them….

    • Wendy says:

      TBB seems to be an example of incompetence, like the guy at the coffe shop who explodes the expresso machine, soaking the customers. This is very different than the cashier at the same shop who is short-changing every inattentive customer, and being paid a bonus by the owner to do so.

      • Frederick says:

        The world surely has gone straight to hell No doubt about that Remember what Walter said to that kid in the Big Lebowski It sure rings true today

        • Wendy says:

          Indeed it has. But the main reason is that there is no jail time for bankers. If I rob a bank, I go to jail. If a bank robs its customers, they pay a proportionately small fine, and things go on like nothing happened.

          I was really dismayed when Warren Buffet downplayed the fraud and tried to say all businesses have trouble from time to time. I lost a lot of respect for him, and it reminded me of the quote that says men will not understand a problem if they are paid enough to never understand it.

  12. Gorbachev says:

    It’s a pain to switch banks.If you think gov’t is going to bail you

    out, why bother.

    • Javert Chip says:


      Well, if you really think the government will bail you out (ha ha, tee hee, snicker, snarf), you gotta start with an ACCURATE RECORD of what SHOULD BE in your account.

      Good luck with that.

  13. David says:

    I opened a TSB account before the troubles.
    It paid 3% on £3000 current account balance and 5% cash back on first £500 credit card spend each month.
    I don’t use it as my main account.
    5% cash back now finished so don’t use the credit card any more.
    TSB reduced 3% to £1500 but after their problems increased interest to 5%.
    Who is going to leave a 5% interest account?

    • Javert Chip says:


      5% on 1,500 pounds = 65 pound per year.

      Holy cow! Who wouldn’t want to bank at an on-going train wreck to earn 65 pounds/year (even after they tried to change it to 3% = 45 pounds/year)?

  14. John Taylor says:

    The text says this:
    “according to TSB, in the second quarter — i.e. at the height of the mayhem — it suffered a net loss of just 6,000 customers: some 26,000 customers moved their account away from TSB, but over 20,000 customers opened a new bank account or switched to TSB.”

    It sounds to me like 26,000 people left. I have to wonder about the 20,000 new accounts – if Wells can create fraudulent accounts for their customers, why can’t TSB?
    If there’s one thing a bank takes seriously, it’s the fear of a bank run. A bank will say or do almost anything to prevent this.

  15. ML says:

    TSB was never a building society. It was a Scottish bank, headquartered in Edinburgh.

    One reason for attracting new customers notwithstanding is that other UK banks are closing branches whereas TSB are not. In our town there were 5 banks inc TSB. Now there are only 2 incl TSB. Not everyone wants to bank online or travel 20 miles or more to bank a cheque. TSB offer counter-service and for an awful lot of customers personal face to face service is important.

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