TSB warned by Financial Markets Authority for overcharging customers $1.42 million

TSB Bank has been issued a warning by the Financial Markets Authority after it overcharged thousands of customers more than $1.4 million in fees it wasn’t supposed to.

The conduct relates to fees charged on business cheque transactions, which affected 7309 customer accounts.

Between November 30, 2017 and November 20, 2023, TSB charged a 25c fee on some business cheque transactions that shouldn’t have attracted the fee.

The error occurred after the bank changed the wording of its Business Cheque terms and conditions in November 2017 to make fees clearer.

However, it left out some transactions that the bank’s systems kept charging for, meaning what customers were told they would be charged and what they were actually charged didn’t match.

TSB self-reported the issue to the Financial Markets Authority (FMA) and has paid $1,734,800 in remediation. This comprised $1,425,127 in refunded fees, $10,404 in related interest and charges, and $299,269 in compensation for the use of that money over time.

Trish Millward, FMA’s acting head of perimeter and response, said financial institutions need to ensure their systems and processes support fair customer outcomes.

“Customers should be able to trust that a bank charges them only what its terms and conditions say it will.

“TSB’s customers had no practical way to check these fees for themselves, and the overcharging went on for six years.

“When financial institutions make changes to their terms and conditions, they need to ensure that their systems can deliver those changes to their customers.”

In 2024, TSB was fined $2.47m after it was found to have charged unreasonable credit and default fees.

The bank charged about $3.6m more than it should have across 12 “unreasonable” credit and default fees over six years between June 2015 and November 2021.

In 2021, the bank was ordered to pay $3.5m in civil penalties for breaching anti-money laundering laws.