City regulator boss Andrew Bailey has told the Treasury Committee there were "frank conversations" with TSB about the way it communicated information about its IT meltdown.
Mr Bailey, chief executive of the Financial Conduct Authority (FCA), said: "I think there is an onus in my view on over-communicating in these situations."
He later added: "A more straightforward recognition of what the situation was would have been helpful."
READ MORE: TSB may be in crisis, but what are the alternatives?
Up to 1.9 million people using TSB's digital and mobile banking found themselves locked out of their bank accounts following the migration of data on customers from former owner Lloyds' IT system to a new one managed by current owner Sabadell.
Mr Bailey said the watchdog will be looking at current account switching levels in the wake of the problems, including whether switching is happening effectively or not.
The committee heard some TSB customers have already started receiving compensation.
Asked about how quickly a compensation system should be set up, Mr Bailey told the committee: "It should happen quickly. It's not complex and it's clear what happened. The timeline is quite short in terms of what went wrong."
READ MORE: Watchdog looks into TSB IT switch that 'gave customers access to wrong accounts'
Asked about levels of fraud, Mr Bailey told the committee: "I'm going to be a little bit circumspect about what we say about fraud... I'm very happy to answer questions but obviously what we don't want to do is give information that fraudsters could use against the firm.
"We think there's been something, I think it's around about just over 10,000, 10,600 incidents and that has resulted in a level of payout."
Later, TSB chief executive Paul Pester said he agreed that the problems created fraudulent conditions for customers.
He said: "We were overwhelmed. We saw a 70 times uplift in cases reported. I obviously apologise profusely for this."
He told the committee the figures referred to by the FCA refer to alerts put by TSB onto accounts pointing out patterns that appeared to be unusual.
He said: "The 10,000 number (is) alerts that we generated... 1,300 people had money taken out of their account by fraudsters."
Asked if he was trying to make the fraud numbers appear more insignificant, Mr Pester said: "I'm deeply apologetic if you believe that I am in some way trying to spin the information."
He said TSB had tried to produce all the information it could for the committee.
READ MORE: Royal Bank handouts will ‘break the shackles’ says TSB chief
Mr Pester, who made a string of apologies throughout the hearing, was asked if he should take responsibility for many committee members feeling the way he had communicated to them was misleading.
He said: "I'm deeply sorry if you feel I have misled the committee. There is nothing that I've said that has not been said in good faith.
"Everything I have said to you I have said in good faith. Everything I have said to you I believe to be full and complete. And every piece of information I've provided to you is the best information I've had available at the time."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here