Staff sales targets undermine the fight against fraud

Remuneration structures that reward sales targets with large bonuses can threaten lenders’ controls against fraud, the Financial Services Authority has warned.

The regulator’s Mortgage Fraud Thematic Review found that sales commission at certain lenders was excessive and could encourage inbranch advisers to expose their firms to fraudulent applications in the pursuit of high targets.

Speaking at the FSA’s Financial Crime Conference, Edna Young, strategy specialist for financial crime and intelligence at the FSA, told delegates that at one lender an employee was able to earn 775% of their salary in bonuses.

She says: “Lenders showed a lack of understanding that remuneration based on sales targets could encourage staff to turn a blind eye to fraudulent activity or incentivise them to commit fraud.”