The Financial Conduct Authority (FCA) has fined TSB Bank £10.9m for failing to ensure that customers who were in arrears were treated fairly.

As part of an independent review commissioned in July 2020, the regulator also found that the bank lacked suitable systems and controls to secure fair outcomes.

As a result, TSB has paid £99.9m in redress to the 232,849 mortgage, overdraft, credit card and loan customers affected.

The FCA found that between June 2014 and March 2020, the bank’s "inadequate processes created a real risk" that repayment plans were not realistic.

TSB’s training did not support its staff in understanding customers’ circumstances, instead potentially encouraging them through incentive schemes to prioritise the number of plans made over taking enough time to assess individual customer circumstances.

As a result, the FCA said that TSB risked agreeing "unaffordable payment arrangements with customers in difficulty" or charging them inappropriate fees, leading to increased uncertainty and stress for vulnerable customers.

Despite TSB becoming aware of potential problems with its collections and recoveries in December 2016, it did not fully address them and take effective action until the review in 2020.

TSB would have been fined over £15.5m, but under the FCA’s processes, however, this fine was cut by 30% as it agreed to resolve the matter.

Joint executive director of enforcement and market oversight at the FCA, Therese Chambers, said: "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."

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