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Sales Incentives (2)


Jun 10 2013

Sales Incentives (2)

Relevance:                   All firms.

Action required:           Watch out for any request to complete an FCA online assessment in respect of sales incentives.

Earlier this year we advised firms that the FSA had published “Finalised Guidance” following their review of incentive schemes.

At the time, the FSA warned firms that it expected them to: 

  • properly consider if their incentive schemes increase the risk of mis-selling and, if so, how;
  • review whether their governance and controls are adequate;
  • take action to address any inadequacies – this might involve changing their governance and/or controls, and/or changing their schemes;
  • where risks cannot be mitigated, take action to change their schemes; and
  • where a recurring problem is identified, investigate, take action and pay redress where consumers have suffered detriment.

Since taking over, the FCA has indicated that this remains an important area for them to keep under review and now in their latest “Regulatory Roundup” sent to all authorised firms, they have suggested that they will be conducting further work on this, starting with an on-line assessment for firms to complete.

Selected firms will be notified of when and how.  As ever, there is also the chance that follow-up contact may be made and this will probably be in line with approach becoming familiar, either to verify the answers given or resolve any concerns.

You should note that the FCA refers to the topic as Risks to customers from financial incentives”, which is in keeping with one of their operational objectives; securing an appropriate degree of protection for consumers.”

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