Co-operative Bank bans sales incentives

| October 10, 2012 | 0 Comments
Co-operative Bank bans sales incentives

The Co-operative Bank has banned sales incentives for its branch staff and replaced them with an incentive system which rewards good customer service with bonuses of up to £400 per quarter.

Around 3 per cent of branch staff were offered incentives to sell products.

The Co-op plans to introduce the new customer service incentive scheme in it call centres next year.

It will assess the levels of customer service offered by staff in a number of ways, including assessments by independent experts and mystery shoppers, and through questionnaires.

Speaking at an event linked to the Conservative party conference, the chief executive of The Co-operative Bank, Barry Totell, said: “Frankly, if your business is about delivering excellent customer service then why would you incentivise selling?

“At banks a customer walks through the door and staff decide they are going to sell that customer a credit card whether they like it or not, because they have a target to sell credit cards that day.

“It is the wrong way for banks to approach it but that is what happens.”

In its recent enquiry the Financial Services Authority (FSA) found that dysfunctional incentive schemes were the root cause of recent mis-selling scandals, including PPI.

It assessed 22 financial firms’ sales incentive schemes and found that many had serious failings.

In one case, the first 21 staff to reach a target were offered a ‘super bonus’ of £10,000.

Such incentive programs were likely to drive staff to mis-sell in order to meet targets and receive bonuses, the FSA suggested.

At a hearing of the Parliamentary Commission on Banking Standards last month, which was formed after banks were found to be rigging the Libor rate, David Walker, Barclays Plc’s chairman-elect, also called for bank to end sales-based pay incentives.

He said that banking standards “had slipped in a grave way”.

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