And now UK-based Lloyds Banking Group is paying the price for not heeding my advice!
Quite a price actually… they have to pay a fine of £28m for ’serious failings’ in relation to sales staff bonus schemes.
This fine follows an £8bn sum set aside for miss-selling loan insurance and £400m for miss-selling interest rate swaps.
The bonus scheme giving rise to the £28m fine (which could, incidentally, have been as high as £35m had Lloyds not agreed to settle early) apparently pressurized staff to achieve their sales targets or else face demotion and pay cuts. Some sales staff even sold products to themselves to avoid retribution.
The UK’s Financial Conduct Authority spokesperson hit the nail on the head when she said that, “… financial incentive schemes are an important indicator of what management values and a key influence on the culture of the organization…”. She also said, “…customers have a right to expect better from our leading financial institutions and we expect firms to put customers first—but firms will never be able to do this if they incentivize their staff to do the opposite.”
My view? Well, fines are all very well… but these big financial institutions seem able to absorb them—and the culture that caused them seems to remain in pace.
Perhaps heads should roll among the management team who signed the scheme off in the first place. That never seems to happen. Shareholders should complain too… they haven’t had a dividend for years.
Tags: advice avoid retribution bonus scheme culture of the organization dangers around objectives demotion dividend expect better financial incentive schemes fine heads should roll hit the nail on the head key influence lloyds banking group management values miss selling miss selling interest rate swaps miss selling loan insurance pay cuts paying the price punishments put customers first relationship relationship between objectives and behavior rewards sales staff bonus schemes sales targets serious failings shareholders shareholders should complain should heads roll sold products to themselves staff way they are set