New watchdog gets his teeth into Lloyds over commission

Lloyds Banking Group has been referred to the Financial Services Authority's enforcement division for "serious failings" in the way it paid commission to its sales staff.

The move is the first act by the new get-tough regulatory regime launched yesterday by the incoming City watchdog boss Martin Wheatley. As predicted by The Independent on Tuesday, he has given notice to Britain's banks that they must end the commission culture which has led to widespread mis-selling.

Mr Wheatley, currently managing director of the FSA, warned bankers: "We intend to change the culture of viewing consumers as simply sales targets and I am going to be personally involved in getting it right."

He reported that a review of the incentive schemes run by 22 banks, building societies, insurers and investment firms led to the action against Lloyds. Other institutions have been told to check past sales to see if mis-selling occurred.

Lloyds yesterday said: "Since the FSA began its review in summer 2011 we have been working closely with them. From the start of this year we have made significant changes to our incentive schemes."

Examples of poor practice featured in the FSA's report included one bank where sales staff were handed a 100 per cent bonus for the sale of loans and PPI, but only if they had sold PPI to at least half their customers.

The PPI scandal has cost Britain's high street banks £10bn in compensation payments to consumers.

"What we found is not pretty," Mr Wheatley said. "Most of the incentive schemes we looked at were likely to drive people to mis-sell."

Richard Lloyd, Which? executive director, said: "Most banks have incentive schemes that prioritise sales over service. This has driven mis-selling and has led to serious failings for consumers. This must change."

Mr Wheatley yesterday promised further supervisory work and a wider review of incentive schemes. The FSA has set up a consultation on the issue giving firms until the end of October to respond.

But Adam Phillips, the chairman of the Financial Services Consumer Panel, demanded swifter action from the City watchdog. "The FSA has been slow to respond," he said. "Consumers continue to suffer from the inappropriate pay and bonus practices in banks. Incentives that encourage client-service staff to make a profit at the expense of the customer need to be removed now."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas