FCA: Sales pressure too aggressive

Sarah Davidson

July 28, 2015

In a statement the regulator said: “We have not identified evidence of widespread issues, but we have identified instances of poor practice through our follow-up work on whistleblowing reports.

“Despite the benefits of good performance management, there will always be an inherent risk that poorly executed performance management can encourage or drive mis-selling because of pressure to meet targets and/or corporate objectives.

“Whilst some pressure is not unexpected, an undue level of pressure is likely to further increase the risk to customers.”

The FCA said it has seen an increase in the level of intelligence about poor performance management practices in sales areas following guidance published in March this year to help firms mitigate the risks posed to consumers by inappropriate performance management practices in firms.

The latest findings suggest that middle managers are particularly likely to have to manage conflicts of interest, where they often have to balance their objectives linked to sales results with other objectives, such as the way products are being sold.

The FCA added: “It is not our role to prescribe how firms manage the performance of their staff, but we expect firms to manage the risk of mis-selling effectively, including identifying where poor performance management practice may be leading to undue pressure.”

Meanwhile writing in this month’s Mortgage Introducer Nigel Stockton, financial services director at Countrywide, said the absence of any activity measurements – let alone targets – other than net promoter scoring and customer satisfaction metrics in the branch mortgage consultant channel has “led to the stagnant growth of this channel within the overall mortgage market”.

Stockton said: “I now am of the view that the branch/direct channel is selling less because of way in which conduct is being measured.

“Much more controversially, I now believe we need some published and transparent statistics on the number of clients who are sold life Insurance when they take out a mortgage in a branch.

“My feeling after talking to some life companies with bank assurance partners, but not backed up statistically and with hard facts and numbers, is that branch mortgage sellers are selling less life cover than ever before. If mortgage consultants are not targeted or measuring this – is this really surprising?”

Stockton called on the regulator to consider at what point this becomes detrimental to the customer.

He added: “If the majority of customers who are sold a mortgage in a branch are now not covered by life cover – for the biggest financial commitment a consumer will enter into – when does this become an issue for a conduct regulator?

“Is the regulator happy that more consumers than ever may have to sell their house at the time of most stress and death of the family breadwinner?

“Personally, I would like to see better statistics and more clarification from the regulator about conduct risks in this area and what we are trying to achieve, as this just cannot be right. It is always important to focus on doing the right thing for the customer and it is important that the regulators keep pace with that.”

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