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05/09/2012
FSA Call For Clampdown On Sales Commission
A call has been made for a clampdown on commission made from the sale of insurance, loans and bank accounts, the UKs financial watchdog has said.
The move comes in the wake of a series of mis-selling scandals such as payment protection insurance (PPI).
The Financial Services Authority (FSA) will not impose an outright ban on commissions, but has said it is demanding that payments be dependent on the customer benefiting, not on the volume of sales.
It is common practice for bank, building society and insurance company staff to have an incentive to sell products and policies.
This includes pushing the sales of bank accounts, mortgages and credit cards when people simply go about their daily financial business in banks.
A representative of the UK's banks said that changes were already being made, but that there was some merit to the use of commission.
"It has been too easy, for too long, for those selling or giving advice to be motivated solely by the rewards on offer to them” Martin Wheatley, FSA managing director, told the BBC.
Adding: "We have found evidence of poor practice and we are concerned that this reward culture is a significant contributor to mis-selling.
"Incentive schemes on PPI were rotten to the core and made a bad problem worse."
(H)
The move comes in the wake of a series of mis-selling scandals such as payment protection insurance (PPI).
The Financial Services Authority (FSA) will not impose an outright ban on commissions, but has said it is demanding that payments be dependent on the customer benefiting, not on the volume of sales.
It is common practice for bank, building society and insurance company staff to have an incentive to sell products and policies.
This includes pushing the sales of bank accounts, mortgages and credit cards when people simply go about their daily financial business in banks.
A representative of the UK's banks said that changes were already being made, but that there was some merit to the use of commission.
"It has been too easy, for too long, for those selling or giving advice to be motivated solely by the rewards on offer to them” Martin Wheatley, FSA managing director, told the BBC.
Adding: "We have found evidence of poor practice and we are concerned that this reward culture is a significant contributor to mis-selling.
"Incentive schemes on PPI were rotten to the core and made a bad problem worse."
(H)
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