The Financial Conduct Authority (FCA) has fined TSB Bank plc £10,910,500 for failing to ensure fair treatment for customers in arrears.
The bank, which provides retail banking and business banking (including asset financing and leasing), also lacked appropriate systems and controls to secure fair outcomes for those customers, according to the regulator.
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As a result of these failings, TSB has already paid £99.9m in redress to 232,849 affected customers, including mortgage, overdraft, credit card, and loan holders.
FCA Final Notice / 9 October 2024
The FCA investigation covered a period from June 2014 to March 2020, during which TSB’s inadequate processes put customers at risk of entering unrealistic repayment plans. In addition, staff training did not fully equip employees to assess individual customer circumstances, and incentive schemes potentially prioritised the volume of repayment plans over thorough assessment. These issues increased the likelihood of unaffordable payment arrangements and inappropriate fees, adding to customers’ stress, particularly for those in vulnerable situations.
The failings were highlighted in an independent review of TSB’s handling of customers in arrears, commissioned by the FCA in July 2020. While TSB had become aware of potential problems with its collections and recoveries processes as early as December 2016, it did not fully address them until the independent review’s findings prompted further action.
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By GlobalDataTherese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, said, “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.”
Since the review, TSB has worked with the independent reviewer and the FCA, completing a comprehensive programme to resolve these issues at a cost of £105m. The bank would have faced a £15.6m fine, but the amount was reduced by 30% as TSB agreed to settle the matter.
TSB was found to have breached FCA Principles 3 (Management and Control) and 6 (Customers’ Interests). The appointment of a Skilled Person to review the bank’s collections and recoveries processes took place in 2020, with the review spanning until 2023.
TSB Bank is owned by the Sabadell Group, a Spanish financial provider. Sabadell bought TSB in 2015.
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