View more on these topics

Foot Anstey: The FCA’s clear warnings on staff pressure tactics


The FCA has released finalised guidance on performance management for firms (FG15/10). This is aimed at all firms that have staff dealing directly with retail customers. It can be tempting to think that it applies only, or mainly, to banks and other firms with a vast direct sales force but the regulator has made it clear this is not the case.

In the opening section of the guidance there are several very clear messages, most of which should not take firms by surprise:

  • A poor culture starts at the top. It is therefore the responsibility of senior management to ensure that whatever performance management processes are used, they do not drive poor behaviours that in turn lead to poor customer outcomes.
  • Whatever performance management or incentive tools are used, they will inevitably drive behaviours by staff at all levels looking to optimise their performance in the eyes of the firm under those processes. Firms and their senior management should largely be able to predict this and should ensure that appropriate controls are in place to deal with it.
  • Form over substance: removing a direct link between “sales” and performance/remuneration will make no difference if an indirect link between the two persists through practices on the ground.

It is interesting to hear that much of the FCA’s work has been prompted by whistleblowing from staff within firms. This indicates that staff subject to poor performance management processes are aware of it and are choosing to do something about it, rather than just go along with it, as may have been the case before.

The flip side of this is that it could also indicate firms’ senior management are not getting the message, which is only likely to increase the FCA’s focus in this area. If staff at lower levels can see there is a problem, then the FCA would expect senior management to be aware of and dealing with it. If they are not and it comes to the FCA’s attention via whistleblowing, then senior management are likely to be very much on the back foot when they come calling.

If asked by the regulator, all firms should be able to demonstrate quickly and clearly that they are taking the following steps:

  • An analysis should have been undertaken of what risks a firm’s performance management processes are likely to generate. The firms should then decide if those risks are unacceptable or if they can be managed.
  • If a firm considers that the risks can be managed, they need to have decided how they will manage them, then do it and document it.

This is an exercise that all firms, if they have not done it already, should be looking at now. The process for ongoing monitoring of the risks should also be robust.

Another important point is the whistleblowing. As already mentioned, it appears a lot of the FCA’s work has been driven by such. If staff are whistleblowing to the FCA that must mean they do not feel they can do so internally, or that if they did it would not be taken seriously. This is a clear sign of poor internal culture. Firms should work on ensuring they have an open and supportive culture under which feedback from staff is proactively encouraged. This is a no brainer. It must be better for firms to seek this feedback internally than risk a member of staff going straight to the regulator.

Furthermore, firms have to show they then act on any potentially negative feedback from staff and take steps to address the issues raised. It is all pretty obvious stuff. The FCA wants to see firms completing the circle: good senior management attitude, risks identified and managed through appropriate procedures, open and supportive culture from top to bottom, regular reporting and feedback, and that feedback being considered and used back at the start of the process to tweak any areas where the firm is falling short.

One thing is certain: the FCA will not be letting up in its focus on this area. It is still not satisfied that firms are taking the issue seriously. Clear warnings and some very practical guidance is being offered to firms. It is now up to them to take up the mantle.



Deflation predicted to return as oil prices fall

Falling oil prices will likely lead to another bout of deflation and means the Monetary Policy Committee should “take its time over raising interest rates”, says Capital Economics. The price of oil is at a six-month low, with a barrel now costing under $50. CPI inflation was 0 per cent in July, although core inflation […]


Govt creates £36m fund to develop brownfield sites for starter homes

The Government has created a £36m pot to pave the way for the creation of thousands of starter homes for first-time buyers. The fund includes £26m so the Government can identify and purchase brownfield sites and £10m for local authorities to prepare more brownfield land for the development of starter homes. The idea behind the […]


UK employment down as wage growth stalls

The total number of people in work has fallen again, while wage growth has also dropped, official figures reveal. Last month, the Office for National Statistics reported employment had fallen for the first time since April 2013, and officials have now confirmed the trend continued into June. For the three months to June 2015, total […]


Leeds BS increases lending by 22%

Leeds Building Society has increased mortgage lending by 22 per cent year-on-year. The society’s interim results, covering the first six months of the year, show it lent nearly £1.5bn to borrowers in H1 this year, up from around £1.2bn in the same period of 2014. Net lending increased 49.7 per cent from £446m to £668m […]

Retire, retirement, calculator

Defined benefit schemes: Part 2

Justin Corliss, business development manager In defined benefit (DB) schemes part 1, we looked at recent guidance aimed at DB scheme trustees and sponsors. In part 2 we will look at guidance available to pension transfer specialists (PTS). In the first instance, PTS should familiarise themselves with COBS 19. All guidance below is designed to […]


News and expert analysis straight to your inbox

Sign up