FCA enforcement: lessons from historic cases

Over the last 18 months the FCA has concluded a series of enforcement actions relating to how customers in financial difficulty were treated in the past.

In October 2024, the regulator fined TSB Bank plc £10.9 million for historic issues between 2014–2019, where some customers in arrears may not have received consistently fair treatment. Since then, TSB has invested heavily in systems and training and paid £99.9m in redress to affected customers.

Earlier in May 2024, HSBC UK, HSBC Bank and M&S Financial Services received a £6.28 million penalty for shortcomings identified between 2017–2018. HSBC had already initiated its own proactive redress programme, with £185m returned to customers, alongside significant investment in improvements.

Outside the high-street banks, Volkswagen Financial Services (UK) Ltd reached a settlement of £5.4m in October 2024, again linked to historic treatment of customers in financial difficulty.

Although these failings took place several years ago, the FCA’s decisions in 2024 send a clear message: affordability assessments, realistic repayment plans, and fair treatment in arrears remain supervisory priorities.

So, what should creditors and collectors be taking away from these actions?

 

1. Evidence affordability, don’t assume it. The FCA expects firms to go beyond a simple income-and-expenditure form. Affordability assessments should be based on up-to-date, accurate information and challenged where figures don’t stack up. Collectors need training to spot red flags and probe sensitively.

2. Make repayment plans sustainable. Unrealistic arrangements don’t help the customer or the creditor. Firms should track how many plans fail within the first few months and use that data to improve conversations, policies and systems.

3. Invest in systems that support the front line. Most of the historic failings came from poor MI, weak controls, or systems that didn’t equip staff with the right information at the right time. Technology should enable better decisions, not just record them.

4. Close the loop with QA and governance. Quality assurance should include affordability checks, treatment of vulnerable customers, and sustainability of forbearance. Findings must feed back into policy, training and incentives, not just sit in reports.

5. Align everything with Consumer Duty. At the heart of these fines is a simple point: customers must receive outcomes that are fair, sustainable and in their best interests. Firms should test arrears journeys against the Consumer Duty outcomes: understanding, support, and fair value.

It’s far easier than it sounds when you have the right tools, Inicio help firms deliver on the Financial Conduct Authority expectations with modern Artificial Intelligence

 

While the issues at TSB, HSBC and VWFS are historic, the FCA’s enforcement in 2024 is a live reminder. Creditors and collectors should treat these cases as a signal to check their own practices today. Affordability, sustainability and fair treatment are not optional extras — they are regulatory expectations, business imperatives, and, ultimately, the right thing for customers.

At Inicio AI we help firms deliver on these expectations. Our platform ensures consistency for every user, whether that’s an agent or a customer. It is designed to reduce cognitive load and training needs, configurable so each client has something unique, and fully auditable with every utterance easily reviewed. Our MI provides clear evidence of how effective affordability assessments and income & expenditure conversations really are, turning regulatory priorities into measurable outcomes.

Curious how this could work in your organisation? We’d love to show you. Contact our team today and book your demo.