FCA financial incentives thematic review update
CII/PFS Policy Briefing
13 March 2014
22 September 2017
Policy and Public Affairs
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.
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.