FSA investigating Lloyds over sales incentives

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Lloyds Banking Group is the bank being investigated by the FSA over the incentives it offered its staff.

The FSA published its report into the way sales incentives drive misselling earlier today. It found that 20 out of 22 firms assessed operated sales incentive schemes that increased the risk of misselling.

The regulator said in the report that one firm reviewed as part of the FSA’s year-long investigation had been referred to enforcement, but did not name the firm.

A Lloyds spokeswoman says: “The group continuously reviews its policies and processes and from the start of this year we have made significant changes to our incentive schemes.

“Today these schemes reward staff for providing high quality customer service, assessed by a wide range of metrics. We reward behaviours that are focused on achieving correct customer outcomes and excellent service as well as monitoring sales to ensure that colleagues have met customer needs appropriately. We also review our schemes four times a year to ensure they remain relevant and appropriate.”

The FSA declined to comment.

Examples of the poor practice uncovered by the FSA include one sales team where bonuses were multiplied up to eight times for cross-selling protection products.

Another firm ran a “super bonus” competition, where the first 21 people to make the required number of sales earned up to £10,000.