The Financial Services Authority, the regulator of financial services in the U.K., this week published final guidance intended to curb questionable sales incentives that can push unsuitable financial products upon consumers.
The guidance follows a review of sales incentives conducted by the FSA in September. That study, which reviewed 22 financial institutions, found that some didn’t understand their own incentive programs because they were so complex. There was also, in many cases, inadequate governance and oversight of the design, approval and review of incentive programs, with risks not identified, assessed or adequately mitigated. One firm, for example, allowed sales staff to earn a bonus of 100% of their basic salary for the sale of loans and “payment protection insurance,” but the bonus was only payable to those who had sold that product to at least half their customers.
