Martin Wheatley, the managing director of the outgoing Financial Services Authority and the chief executive of the incoming Financial Conduct Authority, told bankers that the recent mis-selling scandals would no longer be tolerated.
In a presentation to an audience of financiers, including senior bankers and compliance executives, Mr Wheatley described how customers are being exploited at every opportunity, in a bid to push more products.
His comments follow a review undertaken of financial incentive schemes at many top companies, which found ‘serious failings,’ with conflicts of interest and staff incentivised to sell at all costs. The problems extended to management who were rewarded on the basis of sales made, regardless of the integrity.
Mr Wheatley said that poorly designed and ‘dysfunctional’ incentive schemes were the basis of many of the recent mis-selling scandals, which have rocked the industry.
He went on to describe how financial services had changed its stance over the years, from regarding customers as ‘someone to serve to someone to sell to.’ The head of the FSA then went on to cite examples such as bank clerks being forced to try and push mortgage products, insurance or take out credit, when consumers were just trying to pay a bill over the counter.
The FSA and FCA have announced they will be conducting a joint venture designed to change the current ethos of financial services, putting the ‘service’ back into the industry. A consultation has been opened which is due to close on 31 October 2012 and the FSA has invited anyone – individual or company – with comments on the issue, to contribute to the debate. They are specifically interested in receiving opinions on commission based incentive schemes.