UK’s Financial Conduct Authority (FCA) Fines TSB £10.9M Over “Treatment” of Customers in Financial Difficulty

The UK’s Financial Conduct Authority (FCA) has fined TSB Bank plc (TSB) £10.9 million over the “treatment” of customers in financial difficulty.

The FCA leveled the penalty on the bank for allegedly failing to ensure customers in arrears were “treated fairly.” The FCA further noted that it also lacked “suitable systems” and controls to secure fair outcomes.

Reuters reported that a TSB spokesperson described the issues as”historic,” and they had contacted and apologized to all impacted individuals while reimbursing them.

“We fixed the underlying issues some time ago and have considerably enhanced our support for customers experiencing financial difficulty.”

According to the update from the FCA, TSB has paid £99.9m in “redress” to the 232,849 mortgage, overdraft, credit card and loan customers affected.

The FCA also mentioned that between the time-period of June 2014 and March 2020, TSB’s “inadequate” processes created a “real risk” that repayment plans were not realistic.

Its training did “not fully” support its staff in understanding customers’ circumstances.

The FCA also noted that the staff were “potentially encouraged” by incentive schemes to prioritize the number of plans made “over taking enough time to assess individual customer circumstances.”

As a result of its failings, the FCA said that TSB risked agreeing unaffordable payment arrangements with customers in “difficulty or charging them inappropriate fees.”

As stated in the update from the FCA, this risked “increased uncertainty” and stress, including for vulnerable customers.

The extent of the failings were identified by an “independent review” into TSB’s treatment of customers who had “fallen into arrears, which had been ordered by the FCA in July 2020.”

As stated by the FCA on its official website, 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.”

Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, said that if you get into difficulty, you hope for – and we “expect – fair treatment so a stressful situation isn’t made worse.”

Therese added that 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.

Therese further noted that while it did take action, it took them “instigating a review before it acted effectively to address all the issues.’

TSB has worked with the independent reviewer and the FCA and has concluded a comprehensive program to “resolve these issues, costing £105 million.”

The FCA confirmed that it continues to “supervise” all firms to ensure that they have suitable processes in place to support “struggling” customers.

TSB would have been fined £15,586,500 but it reportedly agreed to “resolve these matters so qualified for a 30% discount under the FCA’s processes.”

The FCA requested that a Skilled Person be appointed to review TSB’s collections and recoveries in July 2020, “following concerns raised both during its own supervision work and by TSB itself.”

This work was reportedly carried out in the time-period between 2020 and 2023.

As mentioned in the update, TSB “breached” Principles 3 (Management and control) and 6 (Customers’ interests) of the FCA’s Principles for Businesses.



Sponsored Links by DQ Promote

 

 

Send this to a friend