FCA says banks cleaning up sales practices
LONDON (Reuters) - Britain's banks have begun changing how they pay staff to help draw a line under years of mis-selling financial products, the Financial Conduct Authority said on Thursday.
Banks have already set aside 16 billion pounds to compensate customers for mis-sold loan insurance, one of a string of scandals going back more than two decades, to include pensions and endowment mortgages.
FCA Chief Executive Martin Wheatley said new supervisory guidelines to stamp out incentives that lead to sales of products a customer does not need were making a difference.
"The FCA's on-going investigation into incentives suggests several UK banks are making strides on reforming reward structures, responding well to guidance," Wheatley told a British Bankers' Association conference.
The FCA was launched in April with a specific remit to protect consumers better than its predecessor, the Financial Services Authority.
"The early analysis - and I think we have to stress this is early analysis - shows three of the biggest UK banks have removed the direct link to sales in incentive arrangements for front-line staff in retail branches, and call centres."
Some concerns remain over the use of incentives in areas like investment and protection sales, Wheatley added.
Going forward, the FCA will look at potential causes of mis-selling due to bad design of products and sales targets.
"But it would be churlish not to recognise progress where it is made. And this is, potentially, one of the most significant steps forward for the UK banking industry since 2008 in terms of repairing the relationship with retail customers," Wheatley said.
(Reporting by Huw Jones; Editing by Susan Fenton)
