Staff Incentives

What the FCA wants to understand

The FCA wants to understand whether your firm uses incentives or remuneration arrangements that could influence employee behaviour and, ultimately, customer outcomes.

Incentives are not prohibited, but firms should be able to demonstrate that any reward structures encourage the right behaviours and do not create conflicts between commercial objectives and customer interests.

Your application should explain:

Whether incentives or bonus schemes will be used.
How performance will be measured.
Whether incentives are linked to sales, revenue or productivity.
How compliance and customer outcomes are considered.
What controls are in place to prevent poor customer outcomes.

A strong submission demonstrates that remuneration supports good conduct, fair customer treatment and the long-term success of the business.

In many start-up brokerages, incentives are used to attract, motivate and retain employees. However, the FCA will want comfort that these arrangements do not encourage employees to prioritise sales over customer needs.

When describing your approach, focus on the behaviours your incentive structure is designed to encourage.

This may include factors such as:

Quality of work.
Customer retention.
Customer feedback.
Compliance performance.
Team contribution.
Achievement of individual objectives.
Training and competence standards.

Simply rewarding employees based on sales volume or income generated is unlikely to provide sufficient comfort to the FCA.

What good looks like

Strong applications typically demonstrate that incentive arrangements balance commercial performance with customer outcomes.

For example, firms may operate schemes where:

Compliance breaches reduce or remove eligibility for incentives.
File quality reviews form part of performance assessments.
Customer feedback influences reward decisions.
Conduct issues are reflected in performance ratings.
Incentives are linked to long-term customer relationships rather than short-term sales results.

The FCA is generally looking for evidence that employees are rewarded for delivering good outcomes, not just generating revenue.

A well-designed incentive scheme reinforces the behaviours the business wants to see, supports a positive culture and aligns individual performance with customer interests.
The strongest applications demonstrate that compliance and customer outcomes are given equal consideration alongside commercial performance.