Mortgage consumers among those treated unfairly
The Financial Conduct Authority (FCA) has fined TSB Bank £10.9 million for failing to treat customers in arrears fairly and lacking adequate systems and controls to ensure fair outcomes.
The bank has also paid £99.9 million in redress to 232,849 affected mortgage, overdraft, credit card, and loan customers.
The failings occurred between June 2014 and March 2020, during which, TSB’s processes created a risk that repayment plans were not realistic for customers, as determined by the FCA. The bank’s staff training, the regulator further found, did not adequately support employees in understanding customers’ financial situations, and incentive schemes potentially encouraged staff to prioritise the number of repayment plans over properly assessing individual circumstances.
As a result, TSB risked agreeing to unaffordable payment arrangements and charging inappropriate fees, which increased the likelihood of stress for customers, particularly those who were vulnerable.
An independent review commissioned by the FCA in July 2020 identified the extent of these failings. TSB became aware of issues in its collections and recoveries process as early as December 2016, but did not fully address them until the 2020 review prompted action.
TSB has since completed a £105 million programme to resolve these issues, working closely with the FCA and the independent reviewer.
In 2022, the financial regulatory body directed more than 3,500 lenders to ensure that borrowers facing financial difficulties and vulnerable customers could access necessary support. The regulator then announced that it would evaluate firms to ensure they were meeting its expectations for protecting struggling customers from financial harm.
“If you get into difficulty, you hope for – and we expect – fair treatment so a stressful situation isn’t made worse,” said Therese Chambers, joint executive director of enforcement and market oversight at the Financial Conduct Authority.
“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.”
Earlier this year, the FCA also fined HSBC UK £6.28 million for failures in handling customers in arrears or experiencing financial difficulty.
The regulator said it would continue to monitor firms to ensure they have adequate processes in place to support customers facing financial difficulties.
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