After a year-long investigation into the way incentive schemes drive misselling, the FSA came to a conclusion brokers are only too aware of – big direct salesforces are too often failing consumers with a rotten sales culture and fixation with short-term profit.
The regulator has – quite rightly – ordered financial services firms to overhaul their sales incentive schemes and pay appropriate redress. The news broke last week that the regulator is already investigating Lloyds over its sales incentives while other firms will be nervously checking through their sales procedures.
But while the crackdown is largely aimed at banks, building societies and other large financial services firms, brokers must not fool themselves into thinking they have nothing to do.
The FSA also raised some concerns about smaller firms and highlighted that appropriate compliance structures must be in place, especially those who pay staff purely according to the revenue they generate.
Meanwhile, the Government last week announced a raft of housing measures aimed at trying to kick-start the UK’s stuttering economy.
These included a £280m extension to FirstBuy, the Government’s shared equity scheme, so a further 16,500 borrowers can take advantage of the scheme.
It also included plans to allow developers to bypass councils’ often costly affordable housing requirements if they can prove these make a house building project unviable as well as plans to build 15,000 new affordable homes and bring back 5,000 homes in to use.
It is good to see the Government is finally waking up to the fact the housing market is key to economic growth. But while these initiatives are to be welcomed, they are short-term measures which merely plaster over the cracks. A lack of supply of mortgage financing is likely to continue to hold back the market.
The Government needs to devise a long-term plan to ensure enough homes are being built and borrowers have access to the mortgages they need and are suitable for.