FSA to widen review into firms' sales incentives

It comes as the regulator produces final guidance for firms who have staff working under such schemes.

The FSA's first review, published in September last year and encompassing banks, building societies, insurers, and investment firms, uncovered a range of serious failings, the regulator said.

These included that most incentive schemes were "likely to drive people to mis-sell" and that firms were "failing to identify how incentive schemes might encourage staff to mis-sell".

Additionally, some firms, the FSA said, failed to understand their own incentive schemes because they were so complex, therefore making it harder to control them.

The FSA has now produced final guidance for firms following feedback from stakeholders, and will monitor firms' compliance.

Martin Wheatley, managing director of the FSA and CEO-designate of the Financial Conduct Authority (FCA), said: "Finalising this guidance is important because it gives financial firms a clear idea of what we expect from them and how they should manage their incentive schemes. It also marks a key step in changing the culture of viewing consumers as a sales target to somebody to serve.

"I have been encouraged by a number of firms that have already overhauled their reward structures, but I want to see others following suit. When I speak to the bosses of the banks they tell me they want to change, and this is good, but real cultural change will only happen if attitudes shift throughout an organisation from the CEO to the frontline sales personnel."

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• FSA