Why have so many people been sold the wrong life insurance products? Why have people been sold Payment Protection products that they didn’t want or need? The answer is simple: it is because salespeople work on commission.

What has happened in the financial services industry over the last twenty years? Greater regulation, more controls and more audits. This hasn’t solved the problem. The cause of the problem is in how people are paid.

Incentives and commissions increase the probability of poor quality sales.

Why doesn’t the regulator know that?

Think of all the people who have been stitched up by door-knocking salespeople who trick people into changing their electricity supplier. These people were driven by incentives. What did the regulator do?

Regulators exhibit the same, dysfunctional, command-and-control thinking; they too need to re-think their theories of control.