The U.K.’s Financial Conduct Authority (FCA) fined TSB Bank PLC for being too tough on customers in financial difficulty.
The regulator fined the bank, which has paid £99.9 million in redress to customers treated unfairly, another £10.9 million for breaching the regulator’s principles by lacking the systems and controls to ensure that clients under financial stress were treated fairly.
An independent review ordered by the FCA found weaknesses in the bank’s processes, which “created a real risk that repayment plans were not realistic.”
It also found the bank’s incentive schemes encouraged staff to prioritize making repayment plans over taking time to assess customers’ circumstances.
As a result, the bank agreed to unaffordable payment plans with customers in financial difficulty, or charged them inappropriate fees, the regulator noted.
“If you get into difficulty, you hope for — and we expect — fair treatment, so a stressful situation isn’t made worse,” said Therese Chambers, joint executive director of enforcement and market oversight with the FCA, in a release.
“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,” she said.
The FCA said the bank “has worked closely with the independent reviewer” and the regulator to resolve these issues, an exercise that cost £105 million.
The bank also agreed to settle the case, qualifying for a 30% discount on the fine, which otherwise would have been £15.6 million.