The Financial Conduct Authority is planning a further crackdown on banks’ sales incentive schemes to stop consumers being “exploited”.
In its first annual risk outlook, published today, the FCA says it will follow its guidance on sales incentives made in 2012 and consider whether more intrusive supervision is needed.
It states: “Some firms’ cultures, processes and products have been designed to enable them to profit from consumer errors and to exploit their superior access to, or understanding of, information on financial products and services.
“This can mean that consumers may not be getting what they need and that firms do not act in consumers’ best interests.”
In the short-term, the FCA pledges to improve the disclosure of product pricing structures while clamping down on misleading headline-grabbing rates.
In September, the FSA launched a review of sales incentive schemes and found 20 of the 22 firms assessed had features that increased the risk of misselling.
Informed Choice managing director Martin Bamford says: “Until the banks are forced to stop labelling ‘sales’ as ‘advice’, consumers will continue to get a raw deal. Any regulatory crackdown will have little impact as long as the banks view their customers as a cash cow to exploit with product sales.”