TSB has been fined £10.9 million for failing to ensure customers in arrears were treated fairly.
The Financial Conduct Authority (FCA) issued the penalty, warning that historic failings meant the bank previously lacked suitable systems and controls to secure fair outcomes for customers.
This left many people struggling with repayments on mortgages, overdrafts, loans and credit cards were facing unaffordable payment arrangements or inappropriate fees.
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The extent of the failings were identified by an independent review into TSB’s treatment of customers who had fallen into arrears, which was ordered by the FCA in July 2020.
The fine comes as the FCA has been clamping down on how banks treat customers, especially since the introduction of Consumer Duty regulations, which require lenders to ensure fair outcomes for their account holders.
Therese Chambers, joint executive director of enforcement and market oversight for the FCA, said: “If you get into difficulty, you hope for – and we expect – fair treatment so a stressful situation isn’t made worse.
“TSB’s woeful systems and controls exposed its customers to risk of harm and meant it missed opportunity after opportunity to do the right thing. While it did take action, it took us instigating a review before it acted effectively to address all the issues.”
Why did the FCA fine TSB?
The FCA found that between June 2014 and March 2020, TSB’s inadequate processes created a real risk that repayment plans for customers struggling with repayments of mortgage, loan or credit card debt were not realistic.
This affected customers with its TSB and Whistletree brands.
The regulator said that TSB’s training did not fully support its staff in understanding customers’ circumstances and employees were potentially encouraged by incentive schemes to prioritise the number of plans made over taking enough time to assess individual customer circumstances.
TSB was informed of these risks in 2016 and started looking into them a year later, the FCA said, but added that TSB did not take “effective action” until the regulator launched an independent review in 2020.
As a result of these failings, 232,849 customers were identified who suffered or were at risk of suffering loss.
TSB made redress payments of £99.9m to affected customers but the FCA said it should have acted sooner and therefore issued a fine.
The £10.9 million figure could have been £15.5 million but TSB was allowed to pay less due to its cooperation with the investigation.
TSB has worked closely with the FCA and has resolved these issues at a cost of £105 million, the regulator revealed.
A TSB spokesperson said: “These are historic issues, and we have contacted all affected customers to apologise and reimburse them for not providing the level of service we should have.
“We fixed the underlying issues some time ago and have considerably enhanced our support for customers experiencing financial difficulty.”
