The Financial Conduct Authority announced on 10 October 2024 that it had fined TSB Bank £10,910,500 for breaches of FCA Principles 3 and 6, which relate respectively to a firm's obligation to organise and control its affairs responsibly and to treat its customers fairly. The regulator's investigation identified deficiencies in how TSB handled customers who were experiencing financial difficulty, with the failings spanning its retail banking, mortgage, and consumer credit businesses.

TSB qualified for a discount on the penalty under the FCA's executive settlement procedures, which allow firms that cooperate with an investigation and agree to settle at an early stage to receive a reduction on the headline financial sanction. Without the settlement discount, the fine would have been higher.

FAILURES IN TREATING CUSTOMERS FAIRLY

FCA Principle 6 requires firms to pay due regard to the interests of customers and treat them fairly. The FCA's findings indicated that TSB's systems and processes fell short of these requirements across multiple product lines.

In retail banking, TSB's treatment of customers struggling with current account overdrafts or falling behind on repayments was found wanting. In mortgages, issues arose with how customers approaching or in arrears were managed. In consumer credit, similar concerns about fair treatment applied.

REGULATORY CONTEXT

The FCA introduced its Consumer Duty framework in 2023. Consumer Duty sets a higher standard for retail financial firms than the prior Treating Customers Fairly regime, requiring firms to demonstrate positive outcomes for retail customers rather than merely avoiding specific misconduct. This case was assessed under the earlier Principles framework.

TSB was separated from Lloyds Banking Group in 2014 and has been owned by Spain's Banco Sabadell since 2015. The FCA published a Final Notice setting out its findings; TSB has paid about £99.9 million in redress to 232,849 customers. The bank has accepted the findings as part of the settlement process, and the penalty has been assessed at the discounted rate reflecting that cooperation.