TSB has paid 232,000 customers an average of £429 each in “redress” after failing to treat them “fairly”, the FCA has said.
The Financial Conduct Authority (FCA) ruled that the bank also lacked suitable systems and controls to secure fair outcomes for some customers in financial difficulty.
TSB has paid a total of £99.9million to 232,849 mortgage, overdraft, credit card and loan customers affected. On average, this works out to around £429 each.
The FCS also fined TSB £10.9M for the issues after it said the bank’s “woeful systems and controls exposed its customers to risk of harm”.
Between June 2014 and March 2020, TSB was found to have inadequate staff training who were in charge of agreeing repayment plans for customers in arrears.
Staff were potentially encouraged by incentive schemes to prioritise the number of plans they made over taking the time to understand individual circumstances and set realistic repayment plans.
This meant TSB risked agreeing unaffordable payment arrangements with customers in difficulty or charging them inappropriate fees. This is suggested to have increased uncertainty and stress, including for vulnerable customers, the FCA said.
The extent of the failings was identified by an independent review of TSB’s treatment of customers who had fallen into arrears, which had been ordered by the FCA in July 2020.
While TSB became aware of potential problems with its collections and recoveries in December 2016, the FCA said it was not until the review in 2020 that the bank 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.”
The bank would have been fined a staggering £15,586,500, however, it agreed to resolve the matters raised, which meant it qualified for a 30 percent discount under the FCA’s processes.
TSB has worked closely with the independent reviewer and the FCA and has concluded a programme to resolve the issues, costing £105million. The FCA said it will continue to supervise all firms to ensure they have suitable processes in place to support struggling customers.
A spokesman for TSB said: “These are historic issues, and we have contacted all affected customers to apologise and reimburse them for not providing the level of service we should have.
“We fixed the underlying issues some time ago and have considerably enhanced our support for customers experiencing financial difficulty.”