TSB has been warned by the Financial Markets Authority for charging fees on business cheque transactions that were not subject to fees according to its own terms and conditions.

Between November 30 in 2017 and November 20 in 2023, the bank charged a 25 cent fee on some business cheque transactions that should not have attracted it.

The error affected 7309 customer accounts.

TSB has paid back a total of $1.73 million, which covers the fees, related interest and charges, and compensation for the use of that money over time.

TSB changed the wording of its Business Cheque terms and conditions in November 2017.

The change was meant to make the fees clearer, but it left out some transactions that the bank's systems kept charging for.

"Customers should be able to trust that a bank charges them only what its terms and conditions say it will," FMA acting head of perimeter and response Trish Millward said.

"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.

“Financial institutions need to ensure their systems and processes support fair customer outcomes."

TSB said it acknowledged the warning.

'We are sorry to the customers affected. We have refunded impacted customers and strengthened our processes to ensure our fees are clearly described and charged correctly."