Whistleblower reports to the FCA on ‘pressure selling’ jumped 23% last year
The number of whistleblower reports made to the Financial Conduct Authority (FCA) relating to ‘pressure selling’ jumped 23% to 58 last year*, up from 47 the year before, says RPC, the city-headquartered law firm.
RPC says this rise in reports suggests that a few outlier firms may have started to return to the high-pressure sales practices that were targeted by regulators following concerns over sales of high-interest loans, packaged bank accounts and add-on insurance packages.
Over the last decade the FCA has moved to prevent financial services firms from relying on commission led selling tactics, which were instrumental in eroding consumer trust in the financial services industry.
RPC says these whistleblowing reports may be coming from employees who feel under pressure from management to use high-pressure techniques to hit demanding sales targets. The FCA has repeatedly asked employees who believe they are being forced to sell with inappropriate techniques to report this to the regulator.
‘Pressure selling’ refers to instances where the sale of products and services subjects customers to ‘aggressive or oppressive behaviour’ or ‘unfair coercion’**.
Jonathan Cary, Partner at RPC, says: “The regulator is very focused on making sure financial services firms don’t adopt bad habits more prevalent a decade ago. Senior management teams would be well advised to emphasise the importance of treating customers fairly in these difficult times to avoid short-sighted sales tactics by rogue employees."
Companies that put vulnerable consumers at risk are in the FCA’s firing line
RPC says that in recent times, the FCA has taken a hard-line approach towards behaviour that could prove detrimental to consumers. This has become even more of a focus during the coronavirus pandemic, as a growing number of consumers find themselves in a difficult financial position.
The regulator has warned firms who may be exploiting customers’ vulnerability for their own gain, that it will not hesitate to take action against those firms who don’t meet guidelines.
“Selling techniques which exploit consumers have been brought into sharp focus during the pandemic. Firms must have policies in place which ensure the protection of the customer, above all else, at this time.”
“The threat of a deep recession and finances being stretched further means some employees might resort to these aggressive selling practices to hit crucial commission targets. In order to stop this the tone must be set from the top down, creating a positive sales culture, where employees don’t feel under pressure.”
*2019/20; year-end June 30
Number of whistleblower reports to FCA on pressure selling increased year-on-year since 2015