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Tied sales staff pay to be probed

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.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Trouble for Openwork then! 7% initial commission on drawdown contracts, good advice boys! Broken company, broken model, cheerio

  2. Hardly surprising when you see the likes of Barclays and the sales driven pressure.

    But they are all at it.

    I just received a wonderful offer from the Nationwide today. They are offering a naff AXA plan for life cover for the over 55’s without underwriting. £28 per month gets you £4,130 cover.

    If you saved this you would have this sum in 12.3 yrs. So do they think a 55 year old won’t survive to 67? What a scam – and the Regulator allows it!

    Would an IFA offer this crap?

    What commission is paid on this ‘contract’.

  3. “thematic” ~ that word again, one of the FSA’s favourite euphemisms for “hindsight”, despite the fact that everyone has known for years that standard bank practice is to peddle as much high commission rubbish as they possibly can.

    I’ve just returned from seeing two clients in Worcester (preceded by a very pleasant lunch with Simon Mansell). Upon his retirement last year, the husband deposited his PCLS at his local Halifax branch and was swiftly hustled into a meeting with one of the bank’s “advisers” who flogged him a unit linked onshore investment bond with St. Andrews Life. No mention whatsoever of Unit Trusts or Unit Trust ISA’s. For a meeting that lasted little more than an hour, Halifax awarded itself commission of £1,750. And that’s value for money good advice? I hardly think so. Such practices have been going on for decades, yet only now has the Crash Gordon’s “world class regulator” finally got round to its latest hindsight review.

    Never mind ~ the RDR will sort everything out and we’ll all live happily ever after. Not.

  4. The banks were wise to this years ago thats why one high street bank, offered commission of 6% accross the board PEP/UT/Bond. And if the target was not achieved, at each and every quarterly review, then that poor individual was reprimanded with the fear of loosing his/her job. Unless, ofcourse more of the same products were sold.

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