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FCA financial incentives thematic review update

CII/PFS Policy Briefing

The FCA has published research gauging the sector's approach to financial incentives at all levels. This is further to guidance the regulator consulted on and put out about a year ago.

On 4 March 2014 the FCA published the emerging results of detailed research to assess the extent to which firms have taken on this guidance one year later. This follows earlier guidance consultation on approaches to financial incentives that the FCA undertook in 2012 and finalised guidance published in early 2013.

Early findings from the thematic research gives some reason for optimism, suggesting that on the whole, many firms have taken notice of the guidance: 

  • all the largest retail banks have either replaced or made significant changes to their incentive schemes; 
  • nearly all other firms also appear to have considered the guidance and many have made changes or improvements. However
  • more progress is needed among firms of all sizes, especially small firms.

The guidance applies to all firms except sole traders and partnerships (though even they need to be mindful of potential mis-selling risks). This briefing also sets out some particular issues for small firms including some questions to consider.

Next steps: the FCA will continue to look at this area and work with the sector towards better implementation. It will especially look to guide small firms to improve their engagement and in-house practises.

Pdf icon small  View the attached document »

Related documents

webpage_icon  CII Briefing: FCA financial incentives guidance consultation (September 2012) »

webpage_icon  FSA: Finalised guidance on financial incentives (January 2013) »


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