The UK's financial watchdog is calling for an end to the vast commissions paid for selling insurance, loans and bank accounts. According to the Financial Services Authority, selling financial products on a commission basis leaves the customer short-changed, and is to blame for the recent series of mis-selling scandals, including the ongoing payment protection insurance (PPI) issues that are costing the banks so many millions.
But the FSA is stopping short of imposing an outright ban. Instead, it has demanded a clampdown on the size of the commissions paid out and a complete rethink of the incentives process, which should reward executives for selling customers the right plans, not just shifting the highest volumes.
Talking to the BBC this morning, Wheatley cited the worst examples of incentivised sales found by him and his team. From a 'super-bonus' of £10,000 to the first staff member to hit a sales target, to increased commission for pushing a single product over another (while claiming all advice was impartial), it was a damning indictment of the financial products industry. 'Most of what we have seen is bad,' concluded Wheatley.