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Do you use financial incentives to motivate your staff?
Customer trust and confidence in financial services has been shaken over the last few years. Therefore, every effort must be made to reassure and reaffirm them when it comes to buying financial products that benefit and protect their interests.
Governing bodies such as the Financial Conduct Authority (FCA) are in place to protect customers – and that is why they have issued guidance on how staff can and should be incentivised to sell financial products.
You can learn more about the FCA and their main objectives in the Car Care Plan blog.
What is a staff incentive?
It is recognised that staff are incentivised to sell – and the practice is not being discouraged. However, incentive schemes must never be at the expense of customers, therefore guidance has been issued to ensure products are being sold for the right reasons, not simply to get a bonus at the end of the month.
Incentive schemes can vary massively, from performance related bonuses to 100% variable pay, and the FCA has found that many are likely to drive staff to mis-sell to hit targets. The way staff are paid influences how and what they sell to customers, but the risks must be managed.
If you would like to speak to a member of our team about setting the right incentives for the right products, call us now on 0844 573 8000
How should the risks of mis-selling be handled?
The key issues for firms managing their incentive schemes include:
- Checking for incentive features that are high risk because they strongly promote aggressive sales behaviours and ensuring they are appropriately controlled
- Using management information to check for spikes and trends in the sales patterns of individuals to identify areas of increased risk
- Doing more to identify inappropriate staff behaviour in face-to-face sales conversations
- Managing the risk in discretionary schemes and balanced scorecards
- Monitoring non-advised sales to ensure staff are not giving advice
- Improving oversight of incentives used by appointed representatives
- Recognising 100% variable pay based on sales increases the risk of mis-selling.
The beginning of 2015 could see significant changes to the way insurance add-on products are sold – including how to incentivise staff. Download our eBook here to learn more.