On 4 July 2017, the FCA published a consultation paper (CP17/20) laying out proposals for how consumer credit firms should manage risks related to how they pay and manage the performance of their staff.

The consultation affects firms that are engaged in credit-related regulated activity and are not subject to any of the existing remuneration codes in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC).

If you really feel the need, that is, SYSC 19A to SYSC 19F. 

The FCA launched her thematic review into staff remuneration and incentives by consumer credit firms in August 2015.

This review is now CP17/20. 

FCA found that a lot of firms had made mistakes....

•High-risk financial incentives and performance incentives which, gueess what? - are likely to encourage high-pressure sales or collections.

•Inadequate or ineffective controls on the above

•A failure to consider the risks their incentives posed and the controls needed to address them.  Often this may have been done, but not documented.

The FCA has given feedback to the firms included in this thematic review, and will conduct further work with some of those firms to understand how they respond to the points raised in the feedback.

Now the FCA proposes new rules in the consumer credit rule book:  Consumer Credit sourcebook (CONC). 

The new ruleS will require firms to put in place  arrangements to detect and manage any risk of non-compliance with their regulatory obligations arising from their remuneration or performance management practices. 

In addition, they will give guidance on how firms should manage their risks.  Trust IFAC - we will help you here.

The FCA is also consulting to give examples of good and poor quality practice.

CP17/20 closes on 4 October 2017. Depending on the nature of responses, the FCA intends to publish a policy statement in early 2018.