The FCA issues TSB a £10.9m fine for not treating customers fairly

The Financial Conduct Authority (FCA) has fined TSB Bank £10.9 million for failing to ensure fair treatment of customers who were in arrears.

The bank's lack of adequate systems and controls resulted in potentially unfair outcomes for hundreds of thousands of customers, leading to significant financial and emotional distress.

Between June 2014 and March 2020, TSB's processes for handling arrears were found to be inadequate, putting customers at risk of being tied to unrealistic repayment plans.

The bank's staff were not fully equipped to understand the individual circumstances of customers, partly due to insufficient training. Additionally, incentive schemes may have encouraged staff to prioritise the quantity of repayment plans set up rather than focusing on the affordability of those plans for each customer.

As a result of these failings, TSB customers faced the risk of being placed on unaffordable payment plans or being charged inappropriate fees, potentially increasing the financial strain on vulnerable individuals.

An independent review, commissioned by the FCA in 2020, highlighted the full extent of the bank's shortcomings.

While TSB had become aware of potential issues with its collections and recoveries as early as December 2016, it did not take effective steps to resolve them until the independent review four years later.

Following the review, TSB has paid £99.9 million in redress to over 232,000 affected customers, covering mortgage, overdraft, credit card, and loan accounts. The bank also launched a £105 million comprehensive program to address its failings, working closely with both the FCA and the independent reviewer.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, criticised TSB’s failures, stating: "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."

The FCA continues to monitor firms to ensure they have adequate systems in place to support customers struggling with debt, aiming to prevent similar failings in the future.