Featured Product

    FSB Assesses Implementation of Compensation Standards and Principles

    June 17, 2019

    FSB published the sixth progress report on the implementation of its principles and standards for sound compensation practices in financial institutions. The report assesses how compensation practices have evolved since 2009. The progress report finds that FSB jurisdictions implemented the principles and standards for sound compensation for all banks that are considered significant for the purpose of the principles and standards. While most banks have put in place practices and procedures that reduce the potential for inappropriate risk-taking, their effectiveness is still being tested. FSB also published a document that provides links to information on the FSB member jurisdictions’ national regulation and supervisory guidance on compensation.

    The report finds that, at most banks, further work is required to validate that practices and procedures operate effectively and cover all compensation-related risks. International supervisory dialog facilitated increased attention to compensation design and implementation, contributing to better practices. Authorities remain focused on compensation practices, with many of them incorporating assessment of compensation practices as part of the ongoing supervisory review processes. The report highlights that for significant banks a number of changes have taken place. Boards appear more active and engaged and compensation processes are now conducted with greater oversight. Compensation arrangements now have longer time horizons, include mechanisms that better align them with effective risk management practices and include a wider range of financial and non-financial risk assessment criteria. Moreover, in recent years, there has been an increased focus on compensation as a tool to address conduct risk, along with a greater emphasis on how results are achieved.

    The report assesses several jurisdictions, including Argentina, Australia, Brazil, Canada, China, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Korea, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Switzerland, Turkey, United Kingdom, and the United States. The FSB principles and implementation standards are intended to apply to financial institutions that are significant for the purposes of compensation standards including banks, insurers, and asset managers. In most jurisdictions, the identified institutions are mainly in the banking sector. Fewer jurisdictions have implemented the requirements for the insurance and asset management sectors. The challenge now is to develop frameworks for assessing the effectiveness of compensation policies and practices in balancing risk and reward. As supervisors continue to monitor compensation practices, they will need to ensure that compensation remains aligned with prudent risk-taking and fully reflects the evolving risks and the new areas of vulnerabilities as they emerge. 

     

    Related Links

    Keywords: International, Banking, Insurance, Securities, Compensation Practices, Progress Report, Operational Risk, Conduct Risk, FSB

    Related Articles
    News

    OSFI Consults on Revisions to BCAR and Leverage Requirements Returns

    OSFI proposed revisions to the Basel Capital Adequacy Reporting (BCAR) and leverage requirements returns for the 2023 reporting, with the comment period ending on July 09, 2021.

    May 04, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Revisions to Nonperforming Loan Data Templates

    EBA published a discussion paper on review of the standardized nonperforming loans (NPL) transaction data templates, along with the proposed revised NPL data templates.

    May 04, 2021 WebPage Regulatory News
    News

    Bundesbank Updates Requirements Documentation for AnaCredit Reporting

    Bundesbank updated AnaCredit reporting requirements for banks, with reference to the Notice 8001/2020.

    May 03, 2021 WebPage Regulatory News
    News

    CBUAE Issues Regulation for Low-Risk Specialized Banks

    CBUAE has issued a regulation that introduces the licensing and supervision framework for low-risk, specialized banks.

    May 01, 2021 WebPage Regulatory News
    News

    APRA Proposes Guidance to Support Prudential Standard on Remuneration

    APRA is consulting on CPG 511—the draft Prudential Practice Guide on remuneration for banks, insurers, and superannuation licensees—with the comment period ending on July 23, 2021.

    April 30, 2021 WebPage Regulatory News
    News

    MAS Announces Grant Scheme to Spur Adoption of Regtech Solutions

    MAS announced a new RegTech grant scheme and an enhancement of the Digital Acceleration Grant (DAG) scheme to accelerate technology adoption in the financial sector.

    April 30, 2021 WebPage Regulatory News
    News

    PRA Review Finds Most Banks Compliant with Regulatory Reporting Rules

    PRA published a letter that sets out findings from the 2020 Internal Audit Review of the Collections function of a sample of non-systemic banks and building societies.

    April 30, 2021 WebPage Regulatory News
    News

    EIOPA Launches Consultation on Interbank Offered Rate Transitions

    EIOPA launched a consultation on the Interbank Offered Rate (IBOR) transitions, in context of the EU Benchmarks Regulation.

    April 30, 2021 WebPage Regulatory News
    News

    IFRS Issues Proposals Related to New Sustainability Standards Board

    The Trustees of the IFRS Foundation proposed amendments to the Constitution of the IFRS Foundation to accommodate the potential formation of the new International Sustainability Standards Board within the governance structure of the organization.

    April 30, 2021 WebPage Regulatory News
    News

    BCB Amends Rules on Open Banking and Proposes ESG Disclosure Rules

    BCB amended the resolution that establishes technical requirements and operational procedures for the implementation of open banking in Brazil, with the amended resolution entering into force on its publication date.

    April 30, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6925