The influential Treasury Select Committee today said it has "lost confidence" in TSB chief executive Paul Pester, heaping pressure on him following a heavily criticised response to the bank's IT meltdown.
In a letter to TSB chairman Richard Meddings, committee chair Nicky Morgan said the bank should consider removing Pester as the head of the bank "as a matter of urgency".
Pester had irked MPs with his responses during a hearing last month on the crisis. He was then criticised by the head of the Financial Conduct Authority, Andrew Bailey, for "poor communication" and an overly optimistic assessment of the bank's service status.
The letter states: "The committee considers that the TSB Board should give serious consideration as to whether Dr Pester's position as chief executive of TSB is sustainable.
The Committee has lost confidence in his ability to provide a full and frank assessment of the problems at TSB, and to deal with them in the best interests of its customers.
"It is concerned that, if he continues in his position, this could damage trust not only in TSB, but in the retail banking sector as a whole. I ask that the Board consider the Committee’s view as a matter of urgency.’"
Chair of the committee Nicky Morgan criticised TSB's public communications for being "complacent and misleading.
"This tone has been set from the top – by Paul Pester – and whether intentionally or not, he has not been straight with the Committee and TSB customers," she said.
"Dr Pester's statements that 'everything is running smoothly for the vast majority of our customers' and that 'there will be no barriers' to customers switching accounts, and his denial that there were problems on TSB’s fraud reporting line, are all examples of this."
Some were unhappy with the committee's stance. Edwin Morgan, director of policy at the Institute of Directors said: "The Treasury Committee has a vital role to play in holding our financial institutions to account, but ultimately a chief executive serves at the pleasure of the board and shareholders, not politicians."
Pester has faced a grilling from MPs over the crisis, which saw the bank's systems crash, leaving consumers and small businesses unable to access their accounts.
Problems started in late April when TSB migrated its computer systems from previous owner Lloyds Banking Group to Spanish bank Sabadell, which acquired it in 2015.
In a statement, TSB chairman Richard Meddings said the bank had made "good progress" in resolving the IT issues, and that TSB was now functioning at, or close to, normal for most customers.
"We recognise that we still have areas where we need to improve performance for our customers and we do not underestimate these remaining issues. The important point is that this progress has been achieved under the leadership of Paul Pester, who continues to have the full support of the TSB Board," he said.
"In addition, the board of TSB believes that communications since the migration have been made in good faith, and based on the information available at the time. As the FCA have themselves noted in their correspondence to the Committee: 'The FCA has no reason at this time to believe that TSB intentionally made misleading or incorrect statements to the Committee.'"