TSB has become the first British back to guarantee it will always refund customers who fall victim to fraud.
High street lenders typically only refund fraud losses in specific circumstances, but under TSB’s “Fraud Refund Guarantee”, customers who have been tricked into authorising bogus payments will also be covered.
The move, described by the lender as a “step-change in banking”, comes around 12 months after criminals exploited a TSB IT meltdown to defraud 1,300 customers. In the UK last year, one in four people were affected by banking fraud and £1.2bn was stolen by criminals.
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“The vast majority of fraud claims across UK banking are from innocent victims of fraud, who have been targeted by criminals and organised gangs,” said TSB’s executive chairman Richard Meddings. “However, all too often these customers must fight to be refunded and are not treated as victims of crime.”
TSB suffered a pre-tax loss of £101m last year, a reduction of £260m on the previous year, after costs associated with the IT meltdown added up to £330m.
After the bank migrated to a new digital platform in April, nearly two million customers were left locked out of their online accounts. Some were also reportedly given access to others customers’ data.
The debacle prompted the departure of the company’s chief executive, Paul Pester, who had been accused by MPs of failing to make a full and frank assessment of the problems at the bank.
A preliminary investigation by IBM found that the lending giant may have “failed to properly test its systems” before migrating its customers over to the new digital platforms.
“Performance testing did not provide the required evidence of capacity,” the report suggested. “IBM has not seen evidence of the application of a rigorous set of go-live criteria to prove production readiness.”
Debbie Crosbie left Clydesdale Yorkshire Banking Group, where she had served as chief operating officer, to join TSB as its new chief executive earlier this year.