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New regulator to target sales incentives that lead to mis-selling
by Sarah Miloudi on Sep 05, 2012 at 07:56
Martin Wheatley, managing director of the Financial Services Authority (FSA) and chief executive officer designate of the Financial Conduct Authority (FCA), has called for an end to the 'mis-selling' created by lucrative sales incentives.
Speaking at an event in London, Wheatley (pictured) this morning said that 'poorly designed' incentive schemes too often result in customers being sold products they do not need or cannot use, yet the sales executive leading the transaction walks away with an enhanced earnings package as a result.
Wheatley delivered his address to an audience of senior bankers, compliance officers, trade and consumer groups, outlining his own experience of using the UK's financial services himself.
He said: 'Why is it that every time I walk into the bank to do something simple, like pay my credit card bill, the person behind the counter asks me if I would like to extend my credit, take out more insurance or look at their competitive mortgage rates?
'When did this happen? Banks for me used to be a service – a place where you would go in, stand in a queue, have a pleasant chat with the clerk and go about your daily business. Some time ago, this changed – financial institutions have changed their view of consumers from someone to serve to someone to sell to.'
Wheatley said that chief executives of these big organisations are ultimately accountable for the way their staff are incentivised, and believes it is up to them to spearhead change, working with the new regulator the FCA when it comes into effect next year.
'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.' Wheatley added, speaking at a Thomson Reuters event.
'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.'
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