TISA responds to FCA review of sales incentives at retail financial services firms
TISA, a not-for-profit membership association operating within the financial services industry, has responded to the latest review from the FCA into sales incentives at retail financial firms.
Peter Smith, head of distribution engagement at TISA, says: “This work has been on-going for 18 months and the latest findings are to be welcomed. Having had experience of running sales teams and sales structures, there is a natural conflict between historic methods of performance management techniques and sales incentive reward schemes, based on a commission model, and the core consumer objectives of RDR. There are obvious clashes in the risk oversights. When advisers or salespeople are rewarded on individual product weightings and volume sales, it naturally leads to a culture of sales distribution that now conflicts with a consumer outcomes based regime.
“This review indicates significant improvements. However, for some businesses it really means a complete change in remuneration structures and product construction. The ‘old style’ variable pay based on sales and product weighting overrides will struggle to work now from a risk controls perspective. What we really need is a complete change of culture and method of measurement and management in the sales distribution process. Performance management measures will always put pressure on sales staff and risk causing poor sales practices. Companies will need to find better methods of structuring the pay and rewards mechanisms and break the link of reward based directly on each sale.”
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