Incentives and remuneration for tied sales staff are being investigated by the FSA.
The FSA says it is carrying out “specific thematic work” looking at remuneration and other incentive practices for in-house sales staff.
It is considering how sales staff are incentivised, whether the incentives increase the risk of misselling and whether those risks are adequately controlled.
It says: “Our requirements under the remuneration code make clear that firms need to include measures to avoid conflicts of interest in their remuneration policies. An example of a conflict that might arise is where incentives are put in place to encourage the promotion of one product over another, against the best interests of the firm’s clients.”
The regulator says the review forms part of the FSA’s more intensive supervisory approach. As part of this, the FSA says it is increasingly carrying out in-depth testing of firms’ product design and distribution processes.
It adds: “Under our new approach, the largest provider firms can expect a very intensive and intrusive assessment of the governance processes and the products that these can deliver.”