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FSA clamps down on mis-selling with new guidance
by Michelle Abrego on Jan 16, 2013 at 10:45
In September 2012 the FSA published a review of sales incentives and asked for feedback on proposed guidance. At the same time Martin Wheatley (pictured), managing director of the FSA, told an audience of senior bankers and insurers to end schemes that encouraged bad sales.
Although it will leave its guidance largely unchanged, the regulator said it was planning to widen its review of sales incentives and will monitor how firms are acting on its guidance.
The FSA said it will widen its assessment of high street banks and other firms from the 22 firms that were originally looked at before the review in September 2012.
The guidance applies to all firms that deal with consumers and have sales staff or advisers who are part of an incentive scheme.
The regulator said it would consider additional work covering how firms manage performance and set targets as respondents to its consultation said these those practices were more likely to increase mis-selling than financial incentives.
Wheatley said: ‘Finalising this guidance is important because it gives financial firms a clear idea of what we expect from them and how they should manage their incentive schemes. It also marks a key step in changing the culture of viewing consumers as a sales target to somebody to serve.
'Firms need to look at this guidance now, work out how it applies to them and what they should do differently.’
The review published in September uncovered a range of serious failings of badly managed incentive schemes that encouraged staff to miss-sell, which suggested that firms had not properly thought about the risks or simply turned a blind eye to them, the FSA said.
The 22-firms investigated encompassed banks, building societies, insurers, and investment firms.
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