Lloyds Bank Record Fine For Staff Bonuses

Lloyds Bank Record Fine For Staff Bonuses.

Lloyds Banking  Group has been issued a record fine by the industry regulator, the Financial Conduct Authority for staff bonuses and incentive schemes of £28m.

Put simply, a core principle within financial services regulations is to not incentivise staff or target staff based upon sales or turnover for bonuses and pay that may lead to poor consumer outcomes such as mis-selling, selling products not required or ‘over’ selling.

Part of the issue was that staffs jobs depended upon how much they sold.  In short, ‘do not hit your target and lose your job’.

The regulator also found that staff received bonuses because they had achieved their targets even though those sales were found be unsuitable.

Comment

These very common practices of old, have been banned by the financial regulator for a number of years and whilst in most industries, people are target driven, the fact that a person’s job security depended upon this means that people do get mis-sold if salespeople are not hitting their targets.

It is a difficult line to walk.  Staff need to earn their wages, if they are not profitable then why employ them?

The difficulty for all is that a balance needs to be found between industries that heavily involve sales and how their sales people are paid.  How do you incentivise staff if they will be paid more for doing better than their colleagues or are not working as hard?  The trouble with financial services is that it affects people’s lives when you mis-advise or mis-sell investments and pensions.

At this firm, no member of staff is incentivised at all on turnover.  All receive pay rises and bonuses based upon merit, effort and overall profitability and efficiency of the business.