Featured Product

    FCA Revises Rules on Remuneration Code to Reflect CRD5

    December 22, 2020

    FCA published a policy statement (PS20/16) that sets out final rules on remuneration for dual-regulated firms, along with the revised versions of the relevant guidance documents. In August 2020, FCA proposed to amend the dual-regulated firms remuneration code and relevant non-handbook guidance, in line with the Capital Requirements Directive (CRD) 5. PS20/16 also summarizes the feedback received during the consultation period and FCA’s response to the feedback. The new rules and guidance will come into force on December 29, 2020. Firms are required to apply the new rules and guidance from the next performance year starting on or after December 29, 2020.

    FCA is amending the dual-regulated firms' Remuneration Code and the relevant non-Handbook guidance to reflect the changes made by CRD 5. The finalized non-handbook guidance documents are general guidance on proportionality and dual-regulated firms and investment firms' Remuneration Codes (SYSC 19A and SYSC 19D)—the frequently asked questions on remuneration. The amendments include the following:

    • Adding categories of staff who must be included as material risk-takers
    • Replacing the current proportionality thresholds with exemptions from some remuneration rules for firms below a certain size and for individuals with remuneration below a certain level
    • Amending the criteria for assessing whether a UK branch of a third-country firm is in scope of application of certain rules
    • Amending the minimum deferral and claw-back periods
    • Introducing a new requirement for firms to have gender neutral remuneration policies and practices
    • Permitting listed firms to award variable remuneration in the form of share-linked instruments and equivalent non-cash instruments

    FCA is also introducing changes to ensure that the dual-regulated firms' Remuneration Code remains effective after the end of the implementation period following the exit of UK from EU. This includes addressing deficiencies in the dual-regulated firms' Remuneration Code and converting certain thresholds that are in Euros to Sterling. These amendments will come into force from January 01, 2021.

    The amendments to the dual-regulated firms' Remuneration Code will help to strengthen the remuneration framework for credit institutions and designated investment firms. The final rules and guidance on remuneration for dual-regulated firms remain broadly consistent with those of PRA, while supporting the objectives of FCA. These changes will ensure that firms can have stronger risk management, implement higher levels of individual accountability, and better incentivize their staff to make decisions not involving short-term or excessive risks. This in turn will contribute to reducing the number of misconduct incidents in these firms and, where misconduct does occur, the level of harm it causes.

     

    Related Links

    Keywords: Europe, UK, Banking, Securities, Remuneration, CRD5, Dual Regulated Firms, Basel, Governance, Operational Risk, PRA, FCA

    Featured Experts
    Related Articles
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR

    The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy

    The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8196