More than 230,000 mortgage, overdraft, credit card and personal loan borrowers have received compensation.
Between June 2014 and March 2020, TSB was found to have inadequate processes in place, described by the FCA as “woeful”, which created a real risk that borrowers’ repayment plans were not realistic.
Incentive schemes prioritised plan volumes
Its training was found not to fully support its staff in understanding customers’ circumstances.
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Bank staff were potentially encouraged by incentive schemes to prioritise the number of plans made over taking enough time to assess individual customer circumstances.
TSB risked agreeing unaffordable payment arrangements with customers in difficulty or charging them inappropriate fees, which could lead to increased uncertainty and stress, including for vulnerable customers.
The failings were uncovered during an independent review of TSB’s treatment of borrowers in arrears ordered by the regulator in July 2020.
According to the FCA, TSB had become aware of potential problems with its collections and recoveries in December 2016.
However, it was not until the review in 2020 that TSB took effective action to fully address them.
Compensation paid
The bank received a fine of £10,910,500. It has paid £99.9m in redress to the 232,849 mortgage, overdraft, credit card and loan borrowers affected.
Therese Chambers, joint executive director of enforcement and market oversight, 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.”
TSB has worked closely with the independent reviewer and the FCA concluding a comprehensive programme to resolve the issues, costing £105m.
A TSB spokesperson said: “These are historic[al] 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.”
