TSB Bank has been hit with a £10.9 million penalty by the UK’s financial regulatory authority following findings that its systems and controls were severely lacking, putting customers at risk.

The Financial Conduct Authority (FCA) imposed the fine after determining that TSB did not treat customers who were in arrears fairly.

The FCA highlighted that these failures led to a situation where customers experiencing financial difficulties could incur erroneous fees or enter into payment plans that were beyond their means. This situation exacerbated stress and uncertainty for those in arrears.

Over 230,000 clients utilizing mortgages, overdrafts, credit cards, and personal loans were identified as being affected, leading to £100 million in compensation payouts.

The regulator criticized TSB for its inadequate systems, stating that they exposed customers to potential harm.

From June 2014 to March 2020, TSB’s protocols were deemed insufficient, creating a genuine risk that proposed payment arrangements for struggling customers were unfeasible, according to the findings from the FCA.

Investigation results indicated that TSB’s training programs did not adequately prepare staff to assist customers in need. Additionally, it was revealed that TSB’s incentive structures may have motivated employees to focus on the number of plans implemented, rather than fully assessing the individual financial situations of their clients.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, stated: “When individuals face financial hardship, they expect fair treatment, which should not exacerbate their stressful experiences. TSB’s insufficient systems left customers exposed and resulted in missed opportunities to act ethically.”

She mentioned that, although TSB eventually took steps to rectify these issues, those efforts only came about after the FCA initiated a review.

TSB reportedly collaborated with the FCA and the independent reviewer, committing to a £105 million initiative aimed at addressing the concerns raised during the investigation.

A TSB representative commented, “These shortcomings are from the past, and we have reached out to all affected customers to extend our apologies and ensure they are compensated for the service failures.”

On a separate note, TSB experienced a system outage on Thursday, resulting in customers being unable to access their bank accounts due to issues with the bank’s app.