The managing director of the Financial Services Authority (FSA), Martin Wheatley, has announced his plans to ban staff sales incentive schemes.
Addressing an audience of senior bankers, trade and consumer groups, Mr Wheatley said that "financial institutions have changed their view of consumers from someone to serve to someone to sell to".
Banks, building societies, insurers and investment companies must focus their attentions on delivering a service to customers, rather than chasing sales targets to benefit themselves. Cultural change is required to resolve the problem, Mr Wheatley stated, and this must come foremost from senior staff.
The FSA chief believes that poorly designed and managed incentive schemes were at the root of many of the recent mis-selling scandals to hit the banking sector, such as payment protection insurance (PPI).
"This bonus-based approach has played a role in many scandals we have seen over the years. Incentive schemes on PPI were rotten to the core and made a bad problem worse," he said.
"We, as the regulator, intend to change this culture of viewing consumers simply as sales targets and I am going to be personally involved in getting this right. This will be part of the ongoing improvements we make to regulation as we seek to make markets work well and give people a fair deal," he added.
The FSA has said that it expects all financial institutions to carefully consider and review any incentive schemes in operation, to minimise any risk of mis-selling to customers.
The consultation on the issue by the FSA will run until the end of October.
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