The UKs Financial Services Authority (FSA) published guidance Wednesday designed to help financial firms avoid creating incentives that cause them to mis-sell products to their clients.

The FSA published draft guidance in September last year along with a review of sales incentives. The final version isn’t much different, although it has been revised for clarity and to provide more examples.

The guidance aims to help firms comply with regulatory principles that demand that firms craft fair incentive schemes and that they have a strategy for mitigating the risk of improper sales. The FSA says the guidance also makes it clear that firms need to manage the risks in how they measure performance and set targets for their employees; and, it says it is considering what additional work it will undertake in this area.

The initial review found a range of serious failings among firms. It found that most incentive schemes were likely to drive people to mis-sell, and that these risks were not being properly managed, and that firms had not properly thought about the risks or simply turned a blind eye to them. It also observed incentive schemes that were too complex; firms relying too much on routine monitoring; and, firms not doing enough to control the risk of mis-selling in face to face situations.

“Finalizing this guidance is important because it gives financial firms a clear idea of what we expect from them and how they should manage their incentive schemes. It also marks a key step in changing the culture of viewing consumers as a sales target to somebody to serve,” said Martin Wheatley, managing director of the FSA, and CEO-designate of the Financial Conduct Authority (FCA).

“I have been encouraged by a number of firms that have already overhauled their reward structures, but I want to see others following suit. When I speak to the bosses of the banks they tell me they want to change, and this is good, but real cultural change will only happen if attitudes shift throughout an organisation from the CEO to the frontline sales personnel,” he added.

The FSA says it is planning to widen its review of sales incentives and will review how firms are acting on its guidance. Wheatley also said that the FSA could still decide to introduce new rules to ensure consumers get a fair deal, “but the answer to that question will ultimately come from the industry’s response to this piece of work,” he noted.