We have published final guidance on how consumer credit firms should manage risks related to how they pay and manage the performance of their staff. The guidance supports firms’ compliance with the final rules (CONC 2.11) published in PS18/7.
In July 2017, we consulted on non-handbook guidance in consultation GC17/6. The consultation sought views on guidance to assist firms in identifying features of their incentive or performance management arrangements that might give rise to potential harm to consumers, and ways they can more effectively manage those risks.
We received feedback from firms, trade bodies and consumer panels. Our Policy Statement (PS18/7)[5], which summarises the feedback received, has been published alongside the finalised guidance.
| The guidance will be of particular interest to firms that make use of the following incentives scheme features that can increase the risk to consumers: | |
|---|---|
| 1. | Salaries and bonuses based on volume, profitability or productivity. |
| 2. | Staff whose pay is largely or entirely variable. |
| 3. | Payments that are dependent on reaching targets or thresholds. |
| 4. | Commission rates that vary with volume or by product. |
| 5. | Incentives linked to value, profitability or terms of the finance sold. |
| 6. | Incentives for selling finance that is linked to the sale of other physical goods. |
| 7. | Competitions or promotions designed to increase sales or collections. |
| 8. | Incentive schemes for managers linked to team performance. |
| 9. | Incentives for sales of non-financial products that may be purchased with finance. |
We have considered and taken into account the feedback sent to us and in light of the broad support for the guidance we have made no substantial changes to the content.
This guidance is relevant to firms that are engaged in credit-related regulated activity and are not subject to any of the existing remuneration provisions (SYSC 19A – SYSC 19F) or remuneration provisions made by an EEA regulator under certain EU Directives. It may also be of interest to consumers and consumer organisations concerned with consumer credit activity.
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