The FSA has reinforced its warning that some firm’s staff incentive schemes result in their customers being treated unfairly.
Speaking at the Apcims annual conference this week, chief executive Hector Sants said the FSA has identified a number of firms who have failed to recognise the influence of incentive schemes on delivering unfair consumer outcomes.
In its July paper on treating customers fairly, the FSA said senior management of firms should consider how their reward culture plays its part in delivering fair consumer outcomes and has highlighted the issue in a number of speeches.
Sants said: “Where firms have reviewed their reward structures, they have often not put sufficient weight on quality issues and do not go far enough in rewarding good behaviour or fair consumer outcomes.”
He said this observation was a reflection of a broader shortcoming around senior management’s TCF planning in many firms.
The FSA has already set down two well publicised TCF deadlines- March 2008 for firms to show they have appropriate management information or measures in place to test TCF and December 2008 to demonstrate they are consistently treating their customers fairly.
Sants also told delegates he was confident that European directives will not compromise the FSA’s move to more principle based regulation.
He said: “As we have stated on previous occasions, Community Law is not in itself incompatible with our more principles-based approach. Indeed Directives are quite often intentionally high-level and outcome-focused to allow transposition by the national authority.”