The Financial Conduct Authority has fined TSB Bank plc £10,910,500 for failing to ensure customers who were in arrears were treated fairly.

The bank also lacked suitable systems and controls to secure fair outcomes, according to the watchdog. TSB has paid £99.9m in redress to the 232,849 mortgage, overdraft, credit card and loan customers affected.

Between June 2014 and March 2020, TSB’s inadequate processes created "a real risk that repayment plans were not realistic". Its training did not fully support its staff in understanding customers’ circumstances, the FCA found. Further, staff were potentially encouraged by incentive schemes to prioritise the number of plans made over taking enough time to assess individual customer circumstances.

As a result of its failings, TSB risked agreeing unaffordable payment arrangements with customers in difficulty or charging them inappropriate fees.

The extent of the failings were identified by an independent review into TSB’s treatment of customers who had fallen into arrears, which had been ordered by the FCA in July 2020.

TSB had become aware of potential problems with its collections and recoveries in December 2016. It was not until the review in 2020, however, that TSB took effective action to fully address them.

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.”

It is understood that the cost to TSB of resolving these issues will amount to £105m.

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