Published: 31st July 2015

The FCA has published Guidance on the risk to customers from performance management at firms (FG15/10) – the paper advises that it will be relevant to all types of firm with staff who deal directly with retail customers.

In the context of the issued Guidance ‘performance management’ refers to the process (e.g. appraisals, sales targets etc.) through which organisations manage how people and teams behave to achieve objectives. The concern is that incentives that are misaligned can lead to pressure on staff to sell, or perhaps more appropriately to mis-sell, products.

Despite previous missives from the FCA – including, of course, the concept of Treating Customers Fairly – thanks to a combination of whistleblowers and media articles it believes that in some cases the reward structures remain sales-focussed, even if terminology has changed from ‘sales’ to ‘meeting customer needs’.

The paper is fairly short at 15 pages but manages to pack in some examples of ‘good practice’ such as senior management actually listening to what frontline staff say about the culture of the firm and maintaining good relationships with staff bodies as well as including a case study.

The Guidance concludes with the requirement that all firms with staff who deal directly with retail customers should read the paper and consider:

  • how their approach to performance management may increase the risk of mis-selling;
  • whether their governance and controls are adequate, and
  • taking action where required to ensure the risks are adequately managed.
Print this Page