Legal News

The Financial Services Authority (FSA) UK’s financial watchdog would be calling for a tough stand later on commissions being paid for selling insurance, loans and bank accounts.
The move has come after a series of mis-selling scandals such as payment protection insurance (PPI). However the FSA was unlikely to impose an outright ban on commissions.
But it is expected to demand that payments be dependent on the customer benefiting, not on the volume of sales.
It has been a common practice for banks, building societies and insurance companies offering incentives to its staff to sell products and policies. This has been seen as a contributing factor in the mis-selling of certain products.
Martin Wheatley, FSA managing director, told the BBC ahead of the report's publication that some incentive schemes seemed gave a wrong guarantee of outcome for the customer.
He added that staff incentive schemes could be good or bad, and most of what they have seen was bad. His review of 21 financial firms found that in many cases they had internal sales schemes that did not work.
In the case of PPI, which was sold alongside loans and credit cards to cover repayments if people became ill or lost their jobs, many people were either not told they had bought it, or had bought it and were not eligible to claim on it.
But many sales staff would get an incentive to promote PPI. Banks were in the process of paying out £9bn in compensation to borrowers who were mis-sold PPI.
The FSA was also concerned about the selling of bank accounts, mortgages and credit cards.
Next year, Mr Wheatley is going to take charge of a new body, the Financial Conduct Authority, to oversee how finance firms were treating their customers.
He agreed that a culture of greed and irresponsible attitude to customers may have "got out of control" in the financial sector.
The public was not going to accept a brutal Darwinian relationship, he said.
Mr Wheatley was also conducting a review of Libor, the inter-bank lending rate that has been discredited following manipulation by traders.
He said that most of the responses to his review had said Libor needed to change, but he declined to discuss it further while investigations were continuing.