Against incentive pay schemes

A new report out from the FSA does a rather good job in showing what the problems are. From the blurb -

• Most incentive schemes were likely to drive people to mis-sell and these risks were not being properly managed;
• firms failing to identify how incentive schemes might encourage staff to mis-sell, suggesting they had not properly thought about the risks or simply turned a blind eye to them;
• firms failing to understand their own incentive schemes because they were so complex, therefore making it harder to control them;
• firms relying too much on routine monitoring of staff rather than taking account of the specific features of their incentive schemes;
• sales managers with clear conflicts of interests, such as a responsibility to manage the conduct of sales staff whilst themselves able to earn a bonus if their team made more sales; and
• firms not doing enough to control the risk of mis-selling in face to face situations.