Even though the consequences of PPI mis-selling are still unravelling, the culture that encouraged it is showing no signs of abating.
The Financial Ombudsman Service has revealed that it is still receiving 1,500 complaints a day directly relating to PPI. Customers who took out credit cards or mortgages have complained they were manipulated into buying policies that were unnecessary or ineffectual.
But a larger concern is that the aggressive selling culture that encouraged this type of scandal is showing no signs of letting up, despite the increased level of scrutiny it is currently under.
Staff at the part-taxpayer owned Lloyds TSB have recently described the extent of the pressure they are facing to deliver on sales targets. Products are allocated ‘points’ depending upon their value and count towards sales targets, they revealed. And with some products incentivised over others, this clearly compromises the integrity of the bank’s customer advice.
The revelation is an embarrassment for the bank’s chief executive, Antonio Horta-Osorio, who recently criticised the culture of aggressive sales targets and said that banks should return to being customer focussed (read more)
“Poorly Designed Incentive Schemes”
A report last week from the Financial Services Authority emphasised its desire to rid the ‘poorly designed incentive schemes’ that have encouraged mis-selling practices and prioritised sales over good conduct.
Its report into the incentive schemes of 22 firms revealed an array of poor practices. Basic salaries for hard-working sales staff could vary by over £10,000 depending on their sales performance, it discovered.
The FSA’s managing director, Martin Wheatley, said that the responsibility for amending this selling culture lay at the top level of financial institutions, but suggested that the regulator was ready to enforce any changes that it thought necessary.
Have you been a victim of mis-selling? Does your bank frequently try to make you sign up for products that you don't need? Let us know about it by leaving a comment below!
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