FCA fines TSB £10.9m over treatment of customers in arrears

The Financial Conduct Authority (FCA) has fined TSB Bank £10.9m for failing to ensure fair treatment of customers in financial difficulty.

According to the City watchdog, between June 2014 and March 2020, TSB's inadequate systems and controls created significant risks for customers in arrears, potentially leading to unaffordable repayment plans and inappropriate fees, particularly for vulnerable people.

The bank, owned by Spanish financial giant Banco de Sabadell, had since paid £99.9m in redress to 232,849 affected customers.

The FCA found that TSB’s staff were not sufficiently trained to understand customers' financial circumstances, and incentive schemes could have encouraged them to prioritise the number of payment plans agreed, rather than ensuring they were realistic and affordable.

It said the failings were highlighted by an independent review it commissioned in 2020, although TSB had first identified potential problems in its collections processes as early as 2016.

Since then, TSB had implemented a programme to address the issues, costing £105m, and worked closely with the FCA to ensure compliance.

“If you get into difficulty, you hope for - and we expect - fair treatment so a stressful situation isn’t made worse,” said Therese Chambers, the FCA’s joint executive director of enforcement and market oversight.

“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.”

Reporting by Josh White for Sharecast.com.