We use cookies to improve site performance and enhance your user experience. If you'd like to disable cookies on this device, please see our cookie management page.
If you close this message or continue to use this site, you consent to our use of cookies on this devise in accordance with our cookie policy, unless you disable them.

Close
In association with

Home > Opinion > Simon Lovegrove

Cultural shift from sales targets

It might be said that one of the outcomes of the financial crisis is that public trust in financial institutions and in particular retail financial services products has deteriorated.

By Simon Lovegrove | Published Sep 19, 2012 | comments

Recently the FSA published a speech by its managing director and chief executive designate of the FCA, Martin Wheatley, who has raised concerns that a reward culture has developed among staff within financial institutions which is directly contributing to mis-selling to consumers across the industry. In particular Mr Wheatley suggests that there is a culture of viewing consumers simply as sales targets.

To explain the development of this culture Mr Wheatley points to defective reward-based approaches that have played a part in a number of scandals that have arisen in recent years (notably PPI). To address the damaging role that such scandals have played Mr Wheatley calls for a cultural shift across the industry to deal with the risk of mis-selling.

The FSA has told firms that it expects them to take action now to deal with any flaws identified in their rewards system and are expecting chief executive and top level management to take the lead in fixing this problem within their organisations. This is a tough ask for firms as the culture of consumer care that the FSA is looking for cannot be delivered overnight. It also requires the firm to undertake a considerable amount of work by questioning the action it has taken and asking itself whether it is designed for the benefit of the consumer or for their bottom line. In addition to facilitate such a cultural change a number of other issues need to be addressed including the training of staff.

Once the reforms to the UK financial services regulatory structure are put into place early next year, the FCA will be assuming responsibility for this initiative and their work will involve further supervisory work, enforcement proceedings and a possible strengthening of rules. It seems to me that this initiative will gather pace and the message is clear - consumer interest needs to be put at the heart of a firm’s operating culture.

It seems to me that this initiative will gather pace and the message is clear - consumer interest needs to be put at the heart of a firm’s operating culture

Simon Lovegrove is a lawyer for the law firm Norton Rose

COMMENT AND REACTION

Our Columnists

Hal Austin

Hal is editor of Financial Adviser and has been for more than a decade. He has previously worked on a number of local and national publications.

Ashley Wassall

Ashley is editor of FTAdviser and writes on all areas of retail finance. Previously supplements editor at Money Management and editor of a European private equity publication.

John Kenchington

John is editor of Investment Adviser and has written about investments for several years. He has worked at titles including City AM and was recently named in the MHP 30 To Watch list of up-and-coming media names.

Jon Cudby

Jon is editor of Money Management and has 12 years' experience covering retail personal finance. In 2005, Jon was launch editor of FTAdviser and most recently he was head of online content for Incisive Media's financial services titles.

Tony Hazell

Tony is a freelance financial journalist, having been editor of Money Mail at the Daily Mail for a number of years. He has been writing a column in Financial Adviser since 2005.

John Lappin

John is a weekly contributor to Investment Adviser with 15 years’ experience in financial journalism and 10 years writing on the IFA sector. He was formerly editor of an IFA trade magazine.

Most Popular
More on FTAdviser
FTA jobs