Financial Conduct Authority imposes £11m fine on TSB for failing to treat arrears customers fairly

TSB Bank has been hit with a near £11m fine by the Financial Conduct Authority (FCA) over its treatment of customers. The bank was found to have failed in ensuring fair treatment for customers in arrears, lacking sufficient systems and controls for fair outcomes, as reported by City AM.

The FCA revealed that TSB had paid out £99.9m to redress 232,840 affected customers across various products including mortgages, overdrafts, credit cards and loans. The issues between June 2014 and March 2020 occurred when "inadequate processes created a real risk that repayment plans were not realistic".

The FCA also criticised the bank's training, suggesting it didn't support staff in assisting customers and potentially incentivised them to prioritise quantity of plans over individual customer circumstances. These failings led to possible unaffordable payment arrangements, as revealed by an independent review ordered by the CMA in July 2020.

TSB reportedly worked closely with the reviewer and FCA, agreeing to a £105m programme to resolve the issues. The bank's fine would have been £15,586,500 but it received a 30 per cent discount for agreeing to resolve the issues.

Therese Chambers, joint executive director of enforcement and market Oversight, commented: "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".

A spokesperson for TSB responded: "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."