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Remuneration in Financial Services
14th April 2016
Remuneration Codes applicable to those in Financial Services
The Financial Conduct Authority has a number of Remuneration Codes that certain regulated firms must adhere to. These remuneration codes set out the standards and policies required to be met by firms with regards to setting pay and bonus awards for staff.
In accordance with the FCA’ statutory objective on enhancing market integrity and protecting consumers, the aims of these Remuneration Codes is to:
Last summer, the UK Regulators – the FCA and PRA – introduced a New Remuneration Code applicable to dual regulated firms increasing the number of Remuneration Codes to four. With the implementation of UCITS V in March 2016, another Remuneration Code for UCITS has now been added, bringing the total to five.
Each code is applicable to a different type of firm and, according to the FCA, these currently apply to over 3,000 firms. Within these firms are banks, building societies, large alternative investment fund managers and investment firms to which the Capital Requirements Directive (CRD) is applicable, plus brokers, broker-dealers, asset managers such as hedge fund managers and UCITS investment firms, firms involved in venture capital, those providing financial advice and multilateral trading facilities (MTFs).
The regulator’s current Remuneration Codes are as follows:
There have been recent developments issued by both ESMA in relation to Remuneration Guidelines for UCITS Managers and the EBA with regards to sound Remuneration Policies for CRD Investment Firms.
The FCA advises that they have adopted a “proportionate approach to implementing the Remuneration Codes and Remuneration Disclosure” meaning that firms may implement the Remuneration Codes in an approach that is suitable to the size and scope of the firm.
Whilst some features of the Remuneration Codes might apply to a firm as a whole, other requirements might apply mainly to material risk takers (MTRs) or ‘Remuneration Code Staff’, these being individuals in:
staff in control functions and risk takers; and
those earning in the same remuneration bracket
If should require any assistance with regards to your Remuneration requirements including reviewing your Remuneration Policy and Remuneration Disclosure requirements, please contact our experienced compliance specialists, who would be happy to help.
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“The approach set out in our general guidance on proportionality also allows firms to implement the Remuneration Codes in a way suitable for its size, internal organisation and the nature, scope and complexity of its activities.”
Remuneration, FCA, April 2016
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If should require any assistance with regards to your Remuneration requirements including reviewing your Remuneration Policy, please send an email to our experienced Compliance specialists.