Fraudsters “exploited” TSB’s tech problems and stole money from 1,300 customers, with some losing their life savings, the bank’s boss has admitted. 

Paul Pester told MPs on Wednesday that the bank experienced 70 times the normal level of fraud attacks last month after a new IT system was introduced in April which some customers struggled to use.

The problem was compounded when the bank was “overwhelmed” with 10,600 alerts about potential fraud as criminals preyed on customers. 

TSB customer Ben Alford told BBC Radio 4′s You and Yours last month that he watched thousands of pounds in wedding savings being stolen from his account as he waited on hold for the bank’s fraud department.

Alford, from Dorset, told the broadcaster it took more than four hours to get through to TSB, by which time his account had been almost emptied.

Some TSB customers are said to be still facing problems after the bank’s five million customers were moved to a system run by by a separate arm of TSB’s Spanish owner, Sabadell, six weeks ago.

The move resulted in 93,700 customer complaints.  

TSB, which is now being investigated by the Financial Conduct Authority (FCA), has said it will compensate customers in full for any fraud they suffered.

The FCA has criticised Pester for his “optimistic view” of the problem and said the bank had got themselves “in a hole and they have got to get themselves out”.

Andrew Bailey, chief executive of the FCA, said that TSB senior managers had responsibility for the situation, even if they did not manage the introduction of the new technology.

While many of the bank services have been fixed, the BBC reported that 40% of those trying to call the bank were still unable to speak to someone, while waiting times had run to more than 30 minutes.

The FCA further criticised TSB for not refunding customers money quickly enough.

At times, only one in 10 calls about fraud were answered, but TSB said, as a result, it put in a new dedicated fraud line.

The FCA said TSB’s poor levels of service may have affected customers’ trust in banking, with Bailey saying:  “A more straightforward recognition of what the situation was would have been helpful.”