TISA responds to FCA review of sales incentives at retail financial services firms
Responding to the latest review from the FCA into sales incentives at retail financial firms, Peter Smith, Head of Distribution Engagement at TISA said:
“This work has been on-going for 18 months and the latest findings are to be welcomed. Having had experience of running sales teams and sales structures, there is a natural conflict between historic methods of performance management techniques and sales incentive reward schemes, based on a commission model, and the core consumer objectives of RDR. There are obvious clashes in the risk oversights. When advisers or salespeople are rewarded on individual product weightings and volume sales, it naturally leads to a culture of sales distribution that now conflicts with a consumer outcomes based regime.
“This review indicates significant improvements. However, for some businesses it really means a complete change in remuneration structures and product construction. The ‘old style’ variable pay based on sales and product weighting overrides will struggle to work now from a risk controls perspective. What we really need is a complete change of culture and method of measurement and management in the sales distribution process. Performance management measures will always put pressure on sales staff and risk causing poor sales practices. Companies will need to find better methods of structuring the pay and rewards mechanisms and break the link of reward based directly on each sale.”
Ends……
For further information, please contact:Peter Smith, Head of Distribution Engagement, TISA – Mobile: 07885 342424Email: peter.smith@tisa.uk.com
Issued on behalf of TISA by Newgate Communications, contact Alistair Kellie – Tel: 020 7680 6558 or 0780 12345 98Email: alistair.kellie@newgatecomms.com
Notes for Editors
TISA
TISA is a not-for-profit membership association operating within the financial services industry. We represent the interests of over 145 member firms involved in the supply and distribution of savings and investment products and services.
TISA has a highly successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for consumers. Policy and regulation continues to be the major focus for our members with regard to corporate responsibility.
TISA and its members’ remit is evolving into a clearer focus on pro-active consultation in the regulatory world in order to influence policy and associated regulation before its creation, rather than reacting to issued policy directives. This will help to ensure a more considered policy creation from the authorities.