FSA boss to tackle ‘bad’ incentive schemes - Business - News - Moneyfacts


Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

FSA boss to tackle ‘bad’ incentive schemes

FSA boss to tackle ‘bad’ incentive schemes

Category: Business

Updated: 05/09/2012
First Published: 05/09/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

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.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Business Moneyfacts Awards finalists announced

Are you in the field of business finance? Then you’ll be familiar with the Business Moneyfacts Awards, the highlight of the year for the industry, and you’ll also be pleased to hear that the finalists for the 2017 ceremony have just been announced!

Business owners – do you have a cash buffer?

Building up a cash buffer can be a vital part of business management, particularly in uncertain times. It’s therefore little surprise to find that SMEs built up significant cash reserves in the lead up to the referendum.

Business owners – are you missing out on returns?

Running a successful company demands strong organisational skills, business acumen and a keen eye for finances, which is why it’s so surprising that many business owners could be missing out on returns because they don’t know their interest rate.