TSB incurs a £10.9m penalty for poor systems and controls in dealing with financially distressed clients
TSB Fined for Historic Failings in Handling Customer Arrears
The Financial Conduct Authority (FCA) has imposed a fine of £10.9 million on TSB, citing the bank's failure to ensure fair treatment of customers in financial arrears. This regulatory action highlights TSB's shortcomings in managing how it dealt with customers struggling financially, particularly those behind on payments.
The FCA requires financial firms to handle customers in arrears with clear communication, reasonable forbearance, and tailored support. The fine suggests that TSB did not meet these standards, resulting in unfair outcomes for those customers. However, the exact practices or failures by TSB that led to this penalty are not detailed in the search results.
The failings affected customers with TSB and Whistletree brands. Between June 2014 and March 2020, TSB's inadequate processes created a real risk that repayment plans for customers struggling with mortgage, loan, or credit card debt were not realistic. As a result, 232,849 customers were identified who suffered or were at risk of suffering loss.
The FCA found that TSB's training did not fully support its staff in understanding customers' circumstances, and employees were potentially encouraged by incentive schemes to prioritize the number of plans made over taking enough time to assess individual customer circumstances. TSB was informed of these risks in 2016 and started looking into them a year later, but the FCA said that TSB did not take "effective action" until the regulator launched an independent review in 2020.
The extent of the failings was identified by an independent review into TSB's treatment of customers who had fallen into arrears, ordered by the FCA in July 2020. The fine comes as the FCA has been clamping down on how banks treat customers, especially since the introduction of Consumer Duty regulations.
TSB has made redress payments of £99.9m to affected customers and has considerably enhanced its support for customers experiencing financial difficulty. A TSB spokesperson stated that "These are historic issues, and we have contacted all affected customers to apologize and reimburse them for not providing the level of service we should have."
It is worth noting that the fine could have been £15.5 million if TSB had not cooperated with the investigation. The FCA's joint executive director of enforcement and market oversight, Therese Chambers, stated that TSB's failings exposed customers to risk of harm and missed opportunities to do the right thing.
The £105 million TSB spent to resolve these issues is a testament to the bank's commitment to rectifying its past mistakes and ensuring that such failures do not occur in the future. The bank has resolved these issues, but it did so only after the FCA instigated a review to address all the issues.
- The fine imposed on TSB by the Financial Conduct Authority (FCA) underscores the importance of financial firms, like TSB, ensuring business practices adhere to fair treatment of customers in arrears, as required by the FCA.
- TSB's failings in handling customer arrears, particularly the mismanagement of mortgage, loan, and credit card debt, were centred around inadequate training for staff and potential prioritization of plan numbers over individual customer circumstances, a situation that the FCA views as detrimental to business conduct.
