Friday, July 25 15:04:56
A Review by the Central Bank today criticised banks, insurers and other financial services providers for their sales remuneration and sales commission policies, saying that they are not sufficiently focussed on the needs of customers.
The review was established to gauge the extent to which incentive arrangements were operated in the best interests of consumers in their design, management and monitoring; and it found the firms it looked at wanting in several areas.
The financial services regulator said it found that a greater emphasis was placed on rewarding higher amounts of sales than on achieving suitable consumer outcomes.
It found that bonus payments were paid fully or largely on the achievement of sales volumes and targets, with little emphasis on the quality of sales to the consumer.
The watchdog also found limited use of penalties or deterrents against poor sales practices and widespread use of branch targets in the banking sector as a means of focusing on the bank's goals.
It found that incentives were being earned on an 'all or nothing' basis; and regular and robust sales quality monitoring was not being performed consistently.
Director of Consumer Protection, Bernard Sheridan said: "The Central Bank expects that, when firms remunerate sales staff on a variable basis, these arrangements focus on encouraging the right culture and behaviour in sales staff, while actively discouraging poor practices. It is important that remuneration arrangements are structured in such a way as to ensure that employees, individually and collectively, are acting in the best interests of their customers and providing suitable products which meet their needs. Therefore sales remuneration arrangements will remain an on-going priority for the Central Bank to ensure that culture and behaviours change accordingly."
For more see: www.businessworld.ie