Royal Bank of Scotland have decided to scrap sales bonuses for staff selling mortgages, credit cards and loans. Instead, they will be giving employees pay increases of around 5%. Normally, I would be against a change like this due to the decrease in incentive for employees. In this case it protects costumers from being offered loans and mortgages they have no chance of paying back. Therefor, I believe that this is a socially responsible move by the bank.
Since RBS is 73% government owned, this move makes a lot of sense. The government should be more concerned with helping people than increasing sales numbers. An incentive like this would be more appropriate in a privately owned business as their main objective will always be to make profit. This raises the question, how ethical is it for any bank to use incentives like this? Do banks hand out loans without believing they can be paid back? I don’t think it’s ethical to use financial incentives like this in this particular industry. I think that RBS made the correct decision in changing the way they compensate employees.
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