The watchdog found that between April 2011 and December 2015 the banks systems and procedures for gathering information from mortgage customers in payment difficulties or arrears resulted in the banks call handlers not consistently obtaining adequate information to assess customers circumstances and affordability.

The banks also employed a system that set a minimum percentage of a customers contractual monthly payment which a call handler was authorised to accept as a payment arrangement without obtaining further authority from a more senior colleague. However, in practice, the system created a risk of inflexibility in approach, says the FCA, with the result that call handlers may have failed to negotiate appropriate payment arrangements for customers.

These risks were exacerbated when, as part of a simplification programme, the banks lost a large number of personnel with mortgage collections and recoveries expertise, after which point nearly all of their mortgage arrears call handlers were new-to-role.

The poor performance has proved costly for the banks, which have so far paid up to £300 million in redress to customers who were treated shabbily as a result of the mismanagement of their cases.

Mark Steward, executive director of enforcement and market oversight at the FCA says: "Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations. By not sufficiently understanding their customers circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears, over several years. In some cases, customers were treated unfairly, including vulnerable customers.

"Firms should take notice of the action we have taken today to ensure that their own treatment of customers meets our expectations."

The banks agreement to accept the FCAs findings meant they qualified for a 30% discount. Otherwise, the FCA would have imposed a financial penalty of £91,495,400. The £64 million fine is the largest handed down to UK high street bank in five years.