The UK’s financial watchdog has fined TSB £10.9 million for its failure to make sure customers in arrears were treated fairly.

On Thursday, the Financial Conduct Authority (FCA) revealed that over a six-year period the bank's inadequate systems and controls created a "real risk" that repayment plans were unrealistic.

TSB has since paid £99.9 million in redress to the more than 230,000 mortgage, overdraft, credit card, and loan customers affected by its poor processes for customers in financial difficulty between 2014 and 2020.

The regulator says that the bank's training did not fully support its staff in understanding customer circumstances.

It found that during the period staff were potentially encouraged by incentive schemes to prioritise the number of plans made over taking enough time to assess individual customer circumstances.

TSB also risked agreeing unaffordable payment arrangements with customers in difficulty or charging them inappropriate fees.

The FCA ordered an independent review into its treatment of customers in financial difficulty in July 2020.

While TSB first became aware of potential problems with its collections and recoveries as early as December 2016, it was not until the review that the bank took effective action to address these issues.

"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, FCA. "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 would have been find over £15 million but qualified for a 30 per cent discount after agreeing to resolve its failures.

The bank spent £105 million as part of a programme to address the issues raised by the FCA.

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