Case Example – Remuneration/Incentives
A medium sized mortgage broker with 10 sales staff and 4 administration staff - two of which handle complaints.
Currently the firm’s consultants earn commission for reaching sales targets, and bonuses on top when certain milestones are passed. No other incentive system operates, but staff are required to follow FSA rules on complaint turnaround times.
The TCF problem
As a result of the sales incentive programme, consultants are encouraged to complete as many sales as possible in a given timeframe. The risk to customers is that, in their eagerness to meet targets, advisers may be tempted to sell a suitable product with which they are familiar when there are others equally or more suitable available for the particular individual in question. As a result customer choice – and therefore fair treatment - may be compromised.
At the same time, opportunities to encourage other staff members to implement TCF are being lost. For example, as things stand staff who deal with customer complaints have no incentives to spot and report opportunities to improve service and reduce future complaints. Their only incentive is to turn complaints around within the FSA timeframes.
To encourage a more balanced approach to sales, the firm could include risk and service performance targets in its rewards programme and make it known that it monitors sales of individual product type against each adviser.
The additional targets might require the consultant to document the range of suitable products discussed with the client and the reason for the final choice out of these. Consultants would only qualify for commission on satisfactory completion of these details - which will be open to scrutiny during file checks and/or if sale statistics suggest undue emphasis of a broker selling one product type. By making consultants aware that MI will monitor sales of individual product by consultant the firm will further encourage them to consider a wider range of similar products and be ready to justify the final choices they make.
On the complaints side, a simple reward programme to encourage staff to suggest ways to prevent complaints re-occurring would benefit both customers and the broker. The reward programme could include points for the number of recommendations made and a financial reward where a recommendation is implemented and shown through MI to reduce complaints and improve service in that area.
For more practical ideas on how to implement a complaints incentive programme read the section Complaints, tips and tools.