Yesterday, FSA managing director Martin Wheatley said the FSA had reviewed 22 firms and found serious failings. These included 100 per cent bonuses for those who sold PPI to half their customers, excessive incentives for certain products and clear conflicts of interests.
The FSA wants firms to review their incentive schemes, governance and controls and address any inadequacies including paying redress to customers if necessary.
Jon Terry, remuneration partner at PwC, said: "Without proposing any specific changes at this stage, it is clear the FSA are concerned with the manner in which many sales incentives plans operate. In particular, there is a view that the plans do not adequately account for risk, quality or conflicts of interest in the sales process.
"Sales professionals tend to cling to commission style plans and value the direct line of sight between pay and sales volumes with any transition away from these likely to pose serious challenges."

Adrian Coles, director-general of the Building Societies Association, said: "The consultation underlines the key problem of mis-selling and what causes it. We will examine the proposals carefully and respond in due course but the fundamental point made by Martin Wheatley is perfectly valid- incentive schemes are fine provided they are structured and balanced in favour of the fair treatment of customers."
Adam Phillips, chair of the Financial Services Consumer Panel, said: "Consumers continue to suffer from inappropriate pay and bonus practices in banks and other financial institutions. Incentives that encourage client service staff to make a profit at the expense of the customer need to be removed now.
"The regulator has made a commitment to change the industry's behaviour. We hope this time the industry will get the message and not try to find a way to get around the rules as they have done in the past."
The proposals are open for consultation until 31 October.