PPI failures

The Financial Services Authority has reviewed the financial incentive schemes of 22 different firms and has uncovered a range of serious failings.
They found that most of the incentive schemes in place were likely to result in agents and employees misselling PPI. Amongst the failings were:
Many businesses failed to understand their own incentive schemes because they were so complex.
Firms failed to assess the danger of misselling or to realise that incentive schemes might encourage staff to mis-sell.
Some sales managers were put in a position of having a conflict of interests, in having responsibility to manage the conduct of sales staff at the same time as they would earn bonuses if their team made more sales.




Particular areas of poor practice included:
One firm where the first 21 sales staff to reach a specific target could earn a super bonus of £10,000.
Basic salaries for sales staff at one firm could change by more than £10,000 per year, depending on how many PPI policies they sold.
One firm offered much higher incentives for one product over another, despite claiming to offer impartial advice to clients.
One firm allowed sales staff to earn a bonus of 100% of their basic salary for the sale of loans and PPI, but the bonus was only payable to those who had sold PPI to at least half their customers.