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  3. The City watchdog has ordered banks to end their bonus culture, in a report that blames staff incentives for corrupting the serv

The City watchdog has ordered banks to end their bonus culture, in a report that blames staff incentives for corrupting the serv

admin2014-09-09  45
问题     The City watchdog has ordered banks to end their bonus culture, in a report that blames staff incentives for corrupting the services they provide and leading to millions of consumers being mis-sold investments and insurance policies. Many of the recent mis-selling scandals over products including payment protection insurance(PPI), endowments and pensions resulted from the way companies rewarded sales rather than service, the Financial Services Authority(FSA)said. The watchdog investigated the incentive and bonus schemes at 22 financial firms, and uncovered a range of "serious failings".
    It is understood that the worst were at Lloyds Banking Group, which has been referred to the FSA’ s enforcement division. This could result in the group, which is 40% owned by the government, facing a fine of billions of pounds. Lloyds has already set aside more than ￡3. 5bn to cover compensation payments. Martin Wheatley, the FSA’s managing director, said banks used to be a place "where you would go in, stand in a queue and have a pleasant chat with the clerk", but some time ago financial institutions had changed their view of consumers "from someone to serve to someone to sell to".
Ways and means
    The FSA found that firms were using a wide range of sales incentives schemes to encourage staff to part consumers from their cash. These included;
    A "first past the post" system where the first 21 sales staff to reach a target could earn a "super bonus" of ￡10,000.
    At another firm, basic salaries for sales staff could move up or down by more than ￡10,000 per year, depending on how much they sold.
    A scheme where sales staff could earn a bonus of 100% of their basic salary for the sale of loans and PPI but only if they sold PPI to at least half their customers.
    One firm’s sales staff could see their bonuses multiplied by up to eight times for cross-selling products.
    An incentive scheme where advisers were paid commission on products sold over the course of the year.
    The FSA has ordered firms to drop such sales tactics in favour of schemes that put the customer first, and said bank bosses should "take a real interest in fixing this". If firms failed to comply, the watchdog said, it was prepared to introduce new rules cracking down on bonus schemes that prioritise sales. "What we found is not pretty," Wheatley said. "Most of the incentive schemes we looked at were likely to drive people to mis-sell in order to meet targets and receive a bonus, and these risks were not being properly managed. " He said he had ruled out getting rid of incentive schemes altogether, but banks would be expected to properly consider whether their incentive schemes increased the risk of mis-selling. "I want to draw a line in the sand and use the report we are publishing today to set out our expectations," he said. "CEOs are ultimately accountable for the way their staff are incentivised, so we expect them to take a real interest in fixing this. "
    Where a recurring problem was identified, banks would be expected to investigate, take action and pay compensation, the FSA said. Past incidents of mis-selling have often been left to the watchdog and consumer bodies to identify and act upon. Firms have until the end of October to submit their views on the guidance, and Wheatley said he expected them to start to clean up their act immediately. Lloyds would not confirm whether it had been referred to the FSA’ s enforcement division, but said in a statement that it had made "significant changes" to its incentive schemes since the beginning of the year. It said it had been "working closely with[the FSA], keeping them updated on our progress and to ensure the changes we have made to the schemes are appropriate. "
    Richard Lloyd, the Which? executive director, said that the FSA’ s findings supported his organisation’ s view that most banks had incentive schemes that prioritised sales. "This must change. It is clear that the light touch regulation of the past has not worked. We want to see the FSA rigorously enforcing the rules and taking tough action against those banks that continue to let their customers down," he said. Figures released by the banks last week showed that customer complaints soared in the first half of this year, due to increasing numbers of cases relating to the mis-selling of PPI. Lloyds received about 860,000 complaints in the first six months, a 145% increase on a year ago. Complaints to Nat West doubled year-on-year, while those to Barclays rose by 80%.
What is the situation with the Lloyds Banking Group? What is the view of the Which? executive director Richard Lloyd?
选项
答案"the worst" at the banking group/worst offender/was questioned and investigated by the FSA’s enforcement division("has been referred to the FSA’s enforcement division")/facing penalty+ compensation/a fine of billions of pounds/the bank setting aside more than ￡5 bn to cover compensation payments/in one year’s time, complaints increased by 145%, reaching 860,000, growing fastest compared with other banks with similar practices most banks have had incentive schemes/the situation of using incentive schemes which "prioritised sales" "must change"/the "light touch regulation" of the past did not work/the FSA must "rigorously" enforce the rules and take "tough action" against such practices
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