Barclays is to abolish sales incentives for frontline branch and telephone staff, which it hopes will help prevent mis-selling.

The bank will stop paying commission or offering other inducements to employees based on how many products they sell from 1 December. Instead, incentives will be based on customer service.

Barclays has been embroiled in numerous mis-selling scandals over recent years, with invectives cited as one of the catalysts.

Key Points

  • Barclays to axe sales commission
  • Co-op also scrapped similar bonuses
  • Incentives blamed for widespread mis-selling

It was one of many banks that pushed payment protection insurance onto customers who would have been ineligible to claim, or pressured those who simply didn't want it into eventually saying yes.

It was also landed with a £7.7 million fine and forced to pay £60 million in compensation last year after flogging high-risk investments to those who had asked for a safe haven for their cash.

Barclays' decision follows a similar move by Co-op Bank earlier this month.

FSA action

The pair acted after the City watchdog, the Financial Services Authority, announced a crackdown on inducements to bank staff last month. It found senior management often turned a blind eye to the risks of mis-selling.

One unnamed firm is set to be hit with a massive fine as a result.

After an investigation, it was found one company paid staff £10,000 if they hit certain targets.

Martin Lewis, founder, says: "While bank staff may be called 'advisers', that should read 'salesperson'.

"Remuneration is often structured to ramp up sales with cliff-hanger rewards. This has led to calculated mis-selling being a constant part of the financial services landscape."

Peter Vicary-Smith, chief executive of consumer lobby group Which?, says: "This is a great move by Barclays. Introducing a bonus scheme that rewards customer service is good news, and we'd like to see all banks and building societies doing the same."