An update to a report on risks to customers from financial incentives from Financial Conduct Authority in September 2012 has revealed that their intervention has yielded significant improvements.
The UK financial watchdog has found that all major high street banks have either replaced or made major changes to high pressure financial schemes which result in mis-selling of products.
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The initial report found that hard-sell sales techniques fuelled by sales bonus targets and incentive schemes meant banks and building societies were selling unsuitable products including investments, credit cards and loans to customers.
As a result, Lloyds was fined £28m ($47m) by the FCA for mispractice.
Martin Wheatley, chief executive of the FCA said: "Eighteen months ago we gave the industry a wake-up call and it recognised that a poor incentive culture had helped push bad sales practice."
"We’ve seen some good progress but it is going to take time to see whether the changes firms have made to incentive schemes and their controls stick"
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By GlobalDataAlthough the report admits "considerable improvements" for firms of all sizes, it cites around one in ten companies with sales teams have higher-risk incentive scheme features that "were not managing the risk properly at the time of assessment".
Suggestions for how firms could continue to improve sales practices included Checking for spikes or trends in the sales patterns of individuals, monitoring poor behaviour in face-to-face sales conversations and managing the risks in discretionary incentive schemes.
