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FSA investigating Lloyds over sales incentives


Lloyds Banking Group is the bank being investigated by the FSA over the incentives it offered its staff.

The FSA published its report into the way sales incentives drive misselling earlier today. It found that 20 out of 22 firms assessed operated sales incentive schemes that increased the risk of misselling.

The regulator said in the report that one firm reviewed as part of the FSA’s year-long investigation had been referred to enforcement, but did not name the firm.

A Lloyds spokeswoman says: “The group continuously reviews its policies and processes and from the start of this year we have made significant changes to our incentive schemes.

“Today these schemes reward staff for providing high quality customer service, assessed by a wide range of metrics. We reward behaviours that are focused on achieving correct customer outcomes and excellent service as well as monitoring sales to ensure that colleagues have met customer needs appropriately. We also review our schemes four times a year to ensure they remain relevant and appropriate.”

The FSA declined to comment.

Examples of the poor practice uncovered by the FSA include one sales team where bonuses were multiplied up to eight times for cross-selling protection products.

Another firm ran a “super bonus” competition, where the first 21 people to make the required number of sales earned up to £10,000.


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There are 17 comments at the moment, we would love to hear your opinion too.

  1. May I join their planet 5th September 2012 at 2:49 pm

    I am considering the options here.
    Achieve – no reward or recognition
    Fail – big bonuses

    Now one of those means I get a job in financial services and one means I get a job in financial regulation !!!

    CV posted to Canary Wharf – ’nuff said’

  2. Never mind Lloyds bank, when is the FSA going to look into the horrendous way credit cards were foisted on the general public by retailers everywhere with no warnings about the obscene interest rates chargeable and what they could do to a persons finances? This one sector alone is blighting the UK`s recovery, people cannot spend if they are servicing debt at massive interest rates!

  3. I spent 3 long years at LTSB and ultimately had no choice but to leave as the working environment and sales culture cultivated by management/board level meant the cowboys would be carried around shoulder high whilst the clients suffered. I eventually learnt how not to do it and left to run a business which has gone from strength to strength by putting the client first. It’s not a difficult concept to grasp or cultivate it just needs ethics, transparancy and a sense of right and wrong. Greed, pressure and shareholder profits are a lethal combination.

  4. Alistair Cunningham 5th September 2012 at 2:51 pm

    …and the RDR will make not one jot of difference to how these banks run their businesses. A missed opportunity?

  5. Having worked at Lloyds and been an ‘adviser’ I can 100% understand where the FSA are coming from. The culture of ‘advice’ in banks needs to change, it was the same when I was at RBS. It is the heads of the business channels that need to be de-authorised by the FSA, the line managers and front line ‘advisers’ are simply trying to earn a living and want to remain employed. The bully tactics i.e. PIPs and development plans senior managers employ make working in such an environment horrible. I have seen many top performers/advisers be held up by the management in lights. The reality is that they are lying to the clients to generate business and when they leave the bank has to clean up the mess. In most cases I am sure the banks have actually lost money on sales because of the clean up and investigations after the sale.
    Banks are in a privileged position, they have a constant stream of clients with money to invest/plan with. Yet they cannot grasp the concept of treating customers fairly. I am glad retail banks are pulling out of advice, unless the culture changes they should not be allowed to give advice.
    Thankfully the FSA are finally realising this.

  6. Hooray FSA. If you want to look at the real causes of miselling in banks send someone in to work undercover as a Financial Adviser. Let them listen to the morning phone conferences when they are told they aren’t selling enough, let them be made to stay late calling hapless clients in for a ‘review’, let them be called 4 times a day by area and regional sales managers to ask why they haven’t ‘performed’ and are letting clients down by not meeting their needs, protecting their ‘families, finances and futures’. Let them be forced into making ficticious appointments so they can get a lunch hour. Let them be placed on a ‘disciplinary’ for not ‘reaching performance targets’, let them be moved every few months to a new branch often over an hours travelling from their homes in order to encourage them to ‘resign’. Let them go off sick through stress, have heart attacks, nervous breakdowns or attempt suicide and be told ‘you are obviously in the wrong job’, and eventually be ‘managed out’. Anyone working in a bank or high street building society will recognise these behaviours. I am not making excuses for shoddy advice but there are bigger industry issues here surrounded by a conspiracy of silence between the management desperate to please shareholders and unions terrified by the threat of more job losses. British Banking used to be the best in the World. Now it is a sham and a national disgrace.

  7. I know this is a bit long but I hope people take a moment to read it.

    Thank God the FSA is starting to do its job!

    Two comments above from Anonymous | 5 Sep 2012 3:56 pm & Anonymous | 5 Sep 2012 5:17 pm are totally right in all of their comments.

    The problem is that those advisers who want to do a proper job within the banking community have been ignored and pressurized to resign by some of the tactics mentioned above.

    It is no good just investigating the incentive schemes you have to going deeper and actually investigate the cultures of the banks including the bully boy tactics.

    I saw many of my colleagues reduced to nervous wrecks because of bully boy management techniques. I didn’t work the Lloyds but I have worked for some major Banks and Building Societies in the past and am glad to say I left to start my own firm because of some of these tactics.

    We keep hearing how bad our banks are but is not the banks are bad is the people at the top that encourage these cultures that are totally based on selling a product rather than servicing clients.

    How can you do 15 appointments in a week – I remember having one manager he said I should have 10 booked fact find meetings 7 booked presentations and at least 5 sales (allowing for two cancelled appointments) and if I didn’t I would be on an audio explaining the reasons why I didn’t. It’s okay if your performance on sales is above target but as soon as it slips this performance management style comes into force.

    It didn’t matter if you were up to your eyeballs in paperwork you are expected to do that as well as the appointments and if you had to work 72 hours to do it so be it. I really would like to know where the working hour directive was within the banking community – I even had one manager claim that the bank had an opt out! When I was working for a building society I remember taking paperwork home and working to 12 o’clock at night to make sure I was up to date with paperwork as just didn’t have enough admin time during working day, as my diary was so booked full of appointments.

    With regards to audios I remember having one manager that stated “you always give people a hard time on Fridays so they have all weekend to worry about it so they come back on Monday work harder to make sure they are not on an audio on Friday. That really stuck in my head even years later.

    Banks have been cutting staff numbers for years and it’s got worse with all of the mergers so when is the regulator going to force banks to start hiring staff as they clearly don’t have adequate systems in place to service their clients.

    I could write a whole book on this and I hope that money marketing will run further articles as this subject really does need to be highlighted.

    It’s interesting that banks and building societies are very quick to point out the secrecy clause in your contract if you voice concerns. This secrecy clause is meant to only be used in connection with client data but some managers use this as a way of trying to hush you up and threaten legal action if you want to take things the FSA. Maybe that explains the reasons why banks and building societies have been getting away with it for so long after all most people who work within banks are just normal individuals wanting to earn a living.

    The reasons why I’m using my real name in this case is that I want to get others to speak out as we will not change our industry the better until the voices of the employees of these organisations are heard and are regulator does what they should have been doing all along which is rooting out these cultures and banning the directors and managers that caused misery not only for the customers but also the hard-working bank employees.

  8. I work for Lloyds TSB as a now financial consultant – protection only, used to up until may a financial adviser. The moral accross lloyds staff is appaling and most staff are actually hoping to be made redundant in order to escape the mess. Constant teleconferences regarding not selling enough, performce tracked monthly and with lloyds anyone ‘not performing’ for one month is put on an informal action plan, this is then taken formal for month 2, and if still formal on month 3 lloyds can sack the individual. you really are living on a month to month basis and most of these staff are level 4 rdr qualified.

  9. For decades the regulators have failed to supervise the banks, like traffic cops they have chased the easy prey, the ones without money, without the big guns.

    But they haven’t even done that properly.

    Siomedig iawn

  10. So the FSA failed to carry out its primary function of regulation?

    Will there be any sackings or disciplinary action taken against FSA staff for these failings?

    If not what is the point of this apart from a large fine to pay for the Xmas party?

  11. Anyone actually read the FSA consutation? It isn’t just about banks!!

    So, if you only earn on a self employed basis this is a risk, if you pay an incentive to reach certain levels of business or run a competiton this is a risk. Even having a target is a risk.

    Basically, paying anyhting other than a guaranteed salary for zero performance is a risk.

    Now, with the best will in the world, thinking like this will mean nobody is every going to be taken on by a firm unless they work for a charitable organisation. Why bother putting any effore in if you get paid regardless and you can’t be managed out for laziness as that might encourage you to miss sell in order to avoid the sack.

    RDR may have been considered as one way of reducing adviser numbers but this is something else.

    Can’t agree with some of the bank’s practices and they need to be reolved but removing the incentive to work hard and do well is nonesensical, as is removing the incentive to employ people.

    The FCA will have to work on an assumption of a lot lessstaff than the FSA – there won’t be sufficient incentive to stay in business for the majority of firms.

  12. I do not understand why advisers who are any good can stomach working for a bank. At the very least a bancassurance adviser is leaving his/her moral compass at home every time he/she smilingly garners the signature/cheque/authority.

    You are selling shit to nice people who are daft-dumb enough to believe YOU not the rubbish being foisted on them. You need to remember that what you are doing is a shameful way to earn a living.

    Leave, become an IFA, sleep nights,prosper.

    I left bancassurane 18 years ago. My advisers are all ex bank. It works. Get out.

  13. Twenty years ago i went for an interview with Lloyds TSB for the position of financial adviser. I was working for Liverpool Victoria at the time. The interviewer was the area manager and I still recall him saying how the push was for sales.. That if I wasn’t having enough appointments and sales he would be on the phone to me two or three times a day to find out what was going on. Fortunately I thought – this is not for me.

    I am still in the industry, working as an IFA. It sounds very much as if the culture has not changed one bit over the last 20 years depsite all the regulation that has gone on since then. This i find very disturbing.

    It is the culture and the ‘tone at the top’ that needs to change – and also the outdated business model that Lloyds and probably other banks are operating.

    While the troops in the front line – the advisers – have the important role of giving financial advice, they are effectively seen as the means to maintain their managers, who do not give advice, in a well paid job. It is a form of pyramid system

    As long as these outdated models and the associated culture remain then so will the problems

  14. CW IFA (because ADVICE counts) 7th September 2012 at 9:50 am

    I’ve worked as a tied adviser, IFA and sales manager for major banks and building societies. Culture is what drives the ‘salesforce’ to mis-sell not necessarily the pay and rewards. Taking to task people who ‘only’ have 12 appointments in their diary for the following week is the norm. If you didn’t have enough sales lined up you were doomed to fail, if you were doomed to fail, you weren’t a good adviser, if your weren’t a good adviser you were managed out.

    I’ve observed advisers sign up huge cases with commission of £15k and yet look as glum as can be because they know they don’t have enough appointments for the following week or because someone else will have written more (by hook or by crook) and will get the recognition.

    I’ve seen advisers shaking in front of clients because the pressure to hit huge targets has become too much for them to bear and pushing their clients to sign up for the ‘flavoured’ product of the month is the only way they can keep the wolves from the door.

    I’ve equally seen great advice being given to clients who in turn have benefited from the professionalism, technical skills and knowledge of the person sat in front of them. I know because I’ve observed it.

    Where am I now? Away from banks, away from management, away from stupid activity management but not away from financial services.

    The moral compass inside of me couldn’t put up with the culture of playground bullies anymore.

    It’s about time someone started looking at targets and incentives at the big banks but without a shadow of doubt it’s the culture that has be looked at primarily, otherwise the same hard working, bullied staff will just get paid less but still go home at the weekends feeling worthless!

  15. I hope that the FSA read some of these readers’ comments from ex bank staff. Disturbing. Very disturbing.

  16. I currently work for LTSB as a senior advisor. I have been employed for over 30 years. I am constantly bullied by the Bank to sell sell sell. They have double standards. All the systems and paperwork make out that we act in the bast interest of the customer but we are pestered daily to push sales and are named and shamed if we don’t. The constant micro management makes it difficult to act in a professional manner as every customer seems to have a price on their head. I am expected to work in my own time without pay and I work at least 6 hrs per week for nothing. This week we were told we had to stay late for 4 hours In our own time and this was compulsary. I am at the end of my tether The union is pathetic and does not support us they know about all the pressure but seem powerless and under the kosh of the bank. Immediate action needs to be taken by the FSA to stop these bully boys. I write this in desperation but feel hopeless and unsupported by the FSA and government.

  17. I read the comments about the other high street banks. There is NO difference at HSBC Bank plc. The line manager upwards put huge pressure on front line staff/advisor to produce sale everyday with measure of daily activity of how many sales are achieved (they say that we are paid on discretionary bonus however will take into account how sales made!) all that means is that the customer suffers….the bank forget without customer service and tcf HSBC will pay cost for it when FSA catch up eventually. Surely the FSA must know what is going on. Well done to Barclays and Coop…..

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