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UK banking clampdown on reward culture

Wednesday, September 05, 2012 - 02:00

Sept.05 - The UK's banks face new rules to stamp out sales incentives that have encouraged mis-selling of financial products going back two decades, the Financial Services Authority says. Ciara Sutton reports

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He's the face behind a clamp down on a series of UK banking scandals. And Financial Services Authority Chief Martin Wheatley has repeated his plea for the banking culture to change. A review of behaviour at 22 banks, insurers and investment firms is ongoing. And Wheatley says most had encouraged the mis-selling of financial products - some for the past two decades. (SOUNDBITE) (English) FINANCIAL SERVICES AUTHORITY CHIEF, MARTIN WHEATLEY, SAYING: "It's too often been the case that the star sales person is applauded by the board and the board turn a blind eye to what has delivered star sales results. What we want boards to do is ask questions about whether those star sales figures have been achieved at the expense of a customer, or whether they have been achieved in accordance with good practice." UK banks have been hit by revelations over sales of unsuitable products, ranging from home loans and pensions. Compensation just for mis-sold loan insurance is set to cost the banks nine billion pounds. (SOUNDBITE) (English) FINANCIAL SERVICES AUTHORITY CHIEF, MARTIN WHEATLEY, SAYING: "At the heart of the culture, the change we expect will be the ability and the appetite to protect consumers better. Dealing with behaviour or people's conduct is at the top of our agenda. From board room to point of sale the behaviour and attitude of financial firms needs to be examined and assessed." The FSA has already shown its teeth in tackling the banks' behaviour. It helped force the resignation of Barclays CEO Bob Diamond, after the bank admitted rigging a global interest rate. But it hasn't always been on the ball and the FSA will be scrapped next year. Wheatley will head its replacement - Financial Conduct Authority, with a remit to protect customers. It will have powers to ban products and intervene earlier in there's any suggestion customers could be ripped off. Ciara Sutton, Reuters.

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UK banking clampdown on reward culture

Wednesday, September 05, 2012 - 02:00