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Big banks cut sales/bonus link but investment still concern, says FCA
by David Campbell on Oct 17, 2013 at 15:52
Three of the UK’s high street banks have cut the direct links between sales and bonuses implicated in many mis-selling scandals in recent years, the head of the Financial Conduct Authority said.
In a speech to the British Bankers Associated today, FCA chief executive Martin Wheatley (pictured) said high street banks, stung by scandals such as PPI, were also beginning to track customer outcomes.
He added that the regulator still had concern about investment products in particular however, alongside protection sales.
‘The early analysis – and I think we have to stress this is early analysis – shows three of the biggest UK banks have removed the direct link to sales in incentive arrangements for front line staff in retail branches, and call centres,’ said Wheatley.
‘In domestic cases like PPI, this link was particularly strong so it is reassuring to see evidence of culture shift taking place.’
‘On top of this, we are seeing evidence of others moving away from formulaic incentives to a more balanced approach. And it’s encouraging to see larger firms increasing tracking of customer outcomes in face-to-face sales.’
He added that these signs of a ‘culture shift’ offered hope that banks were ‘responding well to guidance’.
He added that the roots of mis-selling went deep into all areas of the banking production line however, from design to performance management to sales to internal targets.
These are ‘all areas that are likely to be on the radar going forward,’ he added. ‘But it would be churlish not to recognise progress where it is made. And this is, potentially, one of the most significant steps forward for the UK banking industry since 2008 in terms of repairing the relationship with retail customers.’
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