TSB Bank Fined £10.9 Million for ‘Woeful’ Systems, Putting Customers at Risk of Harm
TSB Bank has been fined £10.9 million by the UK’s financial watchdog for failing to treat customers in financial difficulty fairly over a six-year period. The bank has already paid nearly £100 million in redress to more than 230,000 customers who were affected, including those with mortgages, overdrafts, credit cards, and loans.
The Financial Conduct Authority (FCA) found that TSB’s inadequate processes between 2014 and 2020 exposed its customers to the risk of harm. The bank’s staff responsible for agreeing repayment plans for customers in arrears lacked proper training during this period. In some cases, staff were incentivised to focus on the quantity of repayment plans rather than understanding individual circumstances to set realistic repayment plans.
According to the regulator’s findings, this approach could have led to unaffordable payment arrangements or inappropriate fees being charged to customers in financial difficulty. Such actions could have increased stress and uncertainty, especially for vulnerable customers.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, expressed disappointment, stating that TSB missed multiple opportunities to do the right thing due to its ‘woeful systems and controls’. Chambers highlighted the importance of fair treatment for customers in financial distress to avoid exacerbating their already stressful situations.
TSB became aware of potential issues with its systems in December 2016, but it was not until 2020 when the FCA opened a review that the bank took effective action to address the problems. Despite facing a potential fine of £15.6 million, TSB cooperated with the FCA to rectify its systems and compensate affected customers, resulting in a 30% reduction of the fine.
The bank has since invested £105 million in a comprehensive programme to rectify the issues. A TSB spokesperson acknowledged that these were historic problems and reassured that all affected customers have been contacted, apologised to, and reimbursed for the inadequate service they received.
Moving forward, TSB has stated that it has resolved the underlying issues and significantly improved its support for customers facing financial difficulties. The bank is committed to ensuring that such lapses do not occur again in the future.
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