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BUDGET 2010: Govt backed group to investigate bank sales incentives

The Retail Financial Services Forum will investigate how staff targets and incentives within banks lead to poor outcomes for consumers.

The RFSF is made up of representatives from the financial services industry, consumer groups, regulators and Government, with the goal of championing retail consumers’ interests and helping to restore confidence in financial services.

According to the Budget, published today, the RFSF will set up a working group that will engage with banks, mutuals, consumer groups, employees and trade unions.

It will seek opinions on any detriment suffered by consumers and how the situation can be reformed and will report its findings to the Treasury ahead of the pre-Budget report.

Syndaxi Chartered Financial Planners managing director Robert Reid says: “Any incentive scheme should have a mixture of measurements that would include customer satisfaction, complaint ratios and the level of business actually transacted.


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. Why has this taken so long for the regulators and powers to be to realise something we have known and complained about for years

  2. And the FSA are doing what?? I was under the impression that TCF applied to all authorised bodies – why do we need another government body to do the FSA’s job?

  3. Its not so much the ‘incentives’ as the action plans and managing out of both advisers and the staff who are targetted to fill up the diarys who are not hitting sales targets – not advice targets.
    Generally the customer satisfaction of customers who have gone through the banks sales process will be good – its done straight after they have been ‘sold’ a concept. 1 or 2 years down the line I would imagine its not quite so great due to the quality of product and the advice.
    I would guess that out of all the bancassurance advisers in the uk – 25% are off with long term stress and another 25% are on action or performance contracts.

  4. Why do we need this forum when the FSA is the statutory body to regulate the financial services for the purpose of protecting the consumers?

    Originally another of the FSA’s remits was to educate the population about financial matters. This duty has now gone to another body.

    FSA is doing less and less, and get away with it and our fees are increasing year on year. The latest excuse was that they needed increased funds for the TCF initiative. We are now being told about this forum, at the tax payers expense, I suppose.

    Has the Government at last realised that the FSA has failed as a regulator but to ashamed to admit it?

  5. I read an intersting piece in one of the pinks last week. It was an interview with two likely lads who work for one of the major high street banks one of whom was, I recall, a runner up in the Apprentice some time ago. Strangely, he decided to work for a bank as an ‘adviser’ rather than be sralan’s puppy for a year.

    Anyway, they were both full of praise for the way the bank ‘helped their customers’ and how they wanted ‘to change the way bank advisers are perceived by the general public’ and other such guff.

    They were at pains to emphasise that it was not all about sales targets and numbers but that they were also judged on ‘customer satisfaction’.

    How would that be measured I hear you ask?

    Not necessarilly by the customer filling in a form to rate the service given (as has been suggested here) but by the number of friends and relatives who they would recommend to the bank!

    Sound familiar?! It’s straight out of the old DSF training manual (there’s probably a page in the fact find with ten little boxes to fill in with the unlucky friends and relatives’ details).

    That’s right, it now seems that they are not content with just shafting their existing customers, but are measured for ‘customer satisfaction’ on the number of other unwitting punters they can get their teeth into.

    Plus ca change…

  6. If ever we needed proof that the FSA doesn’t “do” bank regulation, then this surely has to be it. What clearer example could there possibly be?

    The FSA has expressed its disapproval of sales driven performance targets, whilst at the same time refusing to acknowledge the mountains of evidence that these are most rampant in the retail banking sector. Apart from all the reports from IFA’s, customers, ex-bank employees and Which? magazine, the number of complaints surely tells its own story. Yet to all this, the FSA remains resolutely oblivious. Hector Sants says the FSA might look into it.

    So now some other body has to do the FSA’s job for it instead whilst it [the FSA] presses gamely on with its ill-conceived and misbegotten RDR ~ which hasn’t been the subject of any sort of cost:benefit analysis, despite what the FSA claims on its website.

    Bias? Corruption? Favouritism? An uneven playing playing field? A politically skewed agenda?

    Surely not ~ after all, according to Crash Gordon, the FSA is a world class regulator!

  7. Let’s form another committee and, oh, while we’re about it lets have a few sub-committees. Great.

    Guess we shouldn’t carp too much because there is a hint that something sensible might be happening, but…

    The FSA has the statistical evidence and the FOS also has the evidence and the consumer pages of all the national finance sections has the evidence so what is actually being looked at?

  8. I fel a bit like a healthy cow in the last foot and mouth epidemic –
    I know I’m not infected, but I know I’m for the knackers yard – courtesy of that other useless government agency DEFRA

    I know it’s the banks that carry ‘the infection’, but due to the Mass Cull of RDR, I’m for the knackers yard too – or rather, my liveihood is being stolen from me by the FSA. What a bunch of incompetents.

    There was a very disturbing programme on the radio the other day about the effects of giving people unbridled power to inflict pain on fellow human beings. Seems like I am lworking in a parallel universe with the FSA as my tormentors. They must see the pain but they have no mind to cease inflicting it.

    31.12.2012 – I’m out.

  9. If we had done what the banks have (and still do), the FSA would have cancelled our authorisations!

    It would be nice to see an authorative response in these columns from someone senior within the FSA (Hector Sants?) on the following questions:

    How is this fair?

    How is it fulfilling the FSA’s STATUTORY duty to protect customers?

    What are they going to do about it NOW? (Not tomorrow)

    Or are the banks too big to regulate, in the same way that they are too big to fail?

  10. Presumably, despite being “government backed”, the RFSF has no statutory powers and therefore no muscle to take action on any of its findings.


    What will happen in the wake of the RFSF presenting its conclusions which, unless they turn out to be nothing but a mendacious whitewash, will surely confirm all the things we already know about bank selling practices?

    To what body will these conclusions (and presumably recommendations for action) be presented?

    Will the dossier just sit indefinitely in some dusty Whitehall back office awaiting “ministerial consideration”?

    Will it be presented to the Treasury Select Committee and, if so, what will the TSC do with it?

    Will there be some token appearance before the committee on the part of Hector Sants’ successor (by then he’ll be long gone)?

    Will the FSA be asked by the TSC how it can possibly justify having wilfully ignored these findings for so long?

    Will the FSA be directed to pull its effing finger out and do its job? Does the TSC even have the authority to issue such a directive?

    Will the TSC ask the FSA bluntly why it has directed so much of its firepower towards beating up the IFA sector when the REAL and vastly bigger problem is and for years has been the banks?

    Or will the FSA just make some feeble excuses about having had a lot of other things on its plate and undertake to try to get round to the “bank problem” as and when time permits?

    Will the FSA ever be held accountable for all its bias and corruption and failings or will this just be another token slap on the wrist?

    Will the RFSF have any teeth or will this be nothing more than a cosmetic quango exercise?


    Will the Retail Financial Services Forum also ask why the FSA plans on the decimation of the independent sector, the champion of the consumer with only 3% of FOS complaints compared with 59% via the banks? RDR is set to create a 10,000 adviser vacum that the banks will rush in to fill.

  12. Lest we forget!

    In 2007 (before RDR) Dr Thomas Huertas Director Wholesale Firms Division FSA said:

    ‘Commission-based distribution arrangements tend to lead to conflicts of interest and may result in mis-selling.”

    And he went on to say:

    “How do we solve this conundrum? We are genuinely interested in working with banks to find a way to do so.’

    Remember this statement was made in 2007! Even then working with banks for such a solution was like working with Dr Mengele, for the furtherance of pain free surgery.

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