Banks revamp financial incentive schemes

The UK’s leading retail banks have made major changes to financial incentive schemes in order to address mis-selling scandals.

A review by the Financial Conduct Authority (FCA) discovered substantial improvements to schemes, although there are areas that could benefit from further changes.

One in ten firms with sales teams that had higher-risk incentives are still not correctly managing the risk, according to the findings of the FCA.

Martin Wheatley, chief executive of the authority, explained the industry had been alerted to the fact many incentives schemes had wrongly encouraged poor sales practice.

He added: “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 and whether good beginnings are part of genuine cultural change.”

The FCA confirmed it will continue to monitor the area to ensure banks do not return to bad practice.

Recent years has seen many key banks and financial companies, such as Barclays and Homeserve, named in scandals following the mis-selling of products and overzealous practices.

Barclay Simpson – experts in corporate governance recruitment