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Incentive for Front Line Employees (Referrals)

Answered by: 
Randy Carey

Question: 
Our CEO would like to offer an incentive to our front line employees to encourage referrals to our investments department. I am having trouble finding specific guidance on the requirements for a project like this. It seems the regulatory restrictions may be more stringent for loan officers than say tellers, but I would like to provide information on what we can and can not do specifically. Can someone point me in the right direction within a reg or maybe commentary?
Answer: 

https://www.fdic.gov/regulations/laws/rules/5000-4500.html

5. Compensation

Depository institution employees, including tellers, may receive a one-time nominal fee of a fixed dollar amount for each customer referral for nondeposit investment products. The payment of this referral fee should not depend on whether the referral results in a transaction.

Personnel who are authorized to sell nondeposit investment products may receive incentive compensation, such as commissions, for transactions entered into by customers. However, incentive compensation programs must not be structured in such a way as to result in unsuitable recommendations or sales being made to customers.

Depository institution compliance and audit personnel should not receive incentive compensation directly related to results of the nondeposit investment sales program.

First published on 06/11/2017

Filed under: 
Compliance
Filed under compliance as: 
Miscellaneous

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