Consumer Credit Firms Remuneration
The FCA has published proposals relating to performance management and staff incentives as applied within consumer credit firms. This relates to the regulator’s desire to ensure that these areas within firms do not use systems that might prejudice the adoption of best professional practices in areas such as consumer protection and due diligence.
The FCA is engaged in a consultation covering the provision of rules and guidance to assist firms to identify and manage the above risks effectively. The regulator has published the findings of a thematic study carried out with 98 participating consumer credit firms. You can find the full FCA press release here and the consultation paper (CP 17/20) here.
Impact assessment and next steps
The consultation period closes on 4th October 2017 and a policy statement is anticipated in early 2018. A new CONC rule 2.11 is proposed, which will require adequate arrangements to be in place to manage any risks of non-compliance with firms’ regulatory obligations in this area.
Staff incentives, bonuses, performance management and remuneration are all complex areas for firms.
As a result, it would be prudent to start work now with the objective of being ready for the FCA’s policy statement in early 2018. This warning may be particularly applicable to firms where:
- commission accounts for a high proportion of employees’ pay
- different commission rates are applied by product
- variable commissions are paid based upon sales targets
- employee targets are monitored by managers who also have variable income based upon the performance of their personnel
All such areas are highly likely to require substantial modification as a result of the forthcoming policy statement.
How Thistle can help you?
Thistle will continue to keep this area under review and will issue further updates where necessary. For more information, email firstname.lastname@example.org or call 0207 436 0630.