The FCA has fined TSB Bank £10,910,500 for failing to treat customers in arrears fairly.
In imposing the penalty, the regulator noted that the UK lender did not have adequate systems and controls in place to ensure fair outcomes for its customers. TSB has also compensated 232,849 affected customers—covering mortgage, overdraft, credit card, and loan accounts—by paying out £99.9 million. Additionally, the bank has invested £105 million to establish new processes aimed at addressing the identified issues.
These failings were highlighted in an independent review of TSB’s treatment of customers who fell behind on payments, which was commissioned by the FCA in July 2020. According to the FCA, between June 2014 and March 2020, TSB’s insufficient processes created a risk that repayment plans lacked realism. The review found that staff training did not adequately equip employees to understand individual customer circumstances. More concerningly, incentive schemes may have led staff to focus on the number of plans created rather than taking the time to assess each customer’s situation thoroughly.
This oversight ultimately risked exposing customers to unaffordable payment arrangements or inappropriate fees, contributing to increased stress and uncertainty, particularly for vulnerable clients. Therese Chambers, the FCA’s joint executive director for enforcement and market oversight, emphasized the expectation for fair treatment during difficult times. She stated, “TSB’s inadequate systems and controls put its customers at risk and hindered the bank’s ability to respond effectively.” Chambers added that while TSB did take steps towards remedying the situation, it required the FCA to initiate a review before those measures were fully realized.
Initially, TSB faced a potential fine of £15,586,500, but by agreeing to resolve the issues, it qualified for a 30% discount under the FCA’s enforcement guidelines.
On top of this, TSB is currently experiencing additional challenges with its IT systems, issuing an apology to customers affected by a significant outage impacting both its mobile app and online banking services. Frustrated customers have expressed their dissatisfaction on social media.