The FCA has published a brief Guidance Consultation paper about the mis-selling risks that poor performance management and inappropriate sales incentives can create for consumers and consumer facing firms.

The draft Guidance, which includes examples of good and poor practice:

  • follows predictably” from Principle 3 of the FCA’s Principles for Businesses (Management and Control *), and the organisational, and systems and controls rules, in SYSC; and
  • is intended “to help firms comply with existing rules and principles in managing the risk of mis-selling from poor performance management“.

The consultation period is open until 15 May 2015. In the meantime, the FCA expects all relevant firms to “consider:

  • how their approach to performance management may increase the risk of mis-selling[;]
  • whether their governance and controls are adequate[;] and
  • take action where required to ensure the risks are adequately managed“.

(* Principle 3 of the FCA’s Principles for Businesses: “A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems“.)


Posted by Cooley