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Regulator to focus on incentive schemes and culture

Thursday 6 September 2012 10:45 AM
Following a review of 22 firms of various sizes (including banks, building societies, insurance companies and investment firms) that produced "disturbing findings", the FSA has published for consultation some guidance notes on Risks to customers from financial incentives.

In a conference speech, the head of the new regulatory body went on to make the following points:

All financial firms need to take the following steps:

  1. Look at your incentive schemes to see if they increase the risk of mis-selling, and if so how.
  2. Review whether your governance and controls are adequate.
  3. Take action to deal with any weaknesses and flaws identified. 

"Firms need to change how they incentivise their staff and learn to manage their risks. CEO’s are ultimately accountable for the way their staff are incentivised, so we expect them to take a real interest in fixing this . . .

I want to draw a line in the sand here, and use the report we are publishing today to set out our clear expectations."

The FCA will take forward a programme of further supervisory work, involving a wider review of incentive schemes, enforcement proceedings and a possible strengthening of rules. 

"From boardroom to point of sale, the behaviour and attitude of financial firms needs to be examined and assessed – especially in terms of what experience and outcomes it offers customers."

You can read Martin Wheatley's speech in full here.

CTP will shortly be offering a series of events on the issues and challenges associates with Culture, Sales Quality and Incentives. For further information, or help in any of these areas, please call us on 020 3170 5779.

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