The UK’s financial regulator has taken action against TSB Bank after insufficient training and processes resulted in a failure to protect customers who fell into debt.
The UK Financial Conduct Authority (FCA) has fined Edinburgh-headquartered TSB Bank GBP 10.9 million for failing to ensure fair treatment for customers in arrears.
In an announcement yesterday (10 October) the regulator said that, between June 2014 and March 2020, the bank’s “inadequate processes created a real risk that repayment plans were not realistic”, due to lack of training for staff, and that it “lacked suitable systems and controls to secure fair outcomes”, further noting that it had paid GBP 99.9 million in redress to 232,849 borrowers.
In May this year, the FCA fined HSBC GBP 6.2 million for similar failings.
TSB had been aware of potential failings since December 2016 but they were not properly identified until an independent review ordered by the FCA in July 2020.
In a statement, FCA joint executive director of enforcement and market oversight 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.”
The agency reported that it and an independent reviewer have worked with the bank to resolve the issues, at a cost of GBP 105 million.
A TSB spokesperson 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.”
TSB is currently facing a collective action from ‘mortgage prisoners’ – customers whose mortgages were acquired by the bank during the financial crisis and who claim they were forced to overpay on interest rates. However, last month a judge ruled that higher interest rates did not constitute a breach of contract, leaving the case dependent on other contractual questions.
