FSA CP10/19 Revising the Remuneration Code

                                                                                                                                                                                    PDF Version

You may well have already read that the FSA issued a consultative paper at the end of last week in respect of proposed revisions to the so-called Remuneration Code. The Code which currently applies only to the largest banks, building societies and broker/dealers is to be extended to all investment firms covered by CRD III, thus MiFID investment firms will fall within its scope from 1 January 2011.

As a consequence all firms will be required to “..establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote sound and effective risk management”. Each firm’s remuneration policies will be measured by the FSA against this rule.

It is worth noting that the Code will be applied proportionately to each organisation taking into account its size, internal organisation and the nature, scope and the complexity of its activities. There is as yet little to no guidance on what this means in practice and such guidance is not expected to be released until the consultative process is over. We expect that this is where much of the attention of the industry bodies will be focused.

The consultative document can be accessed at http://www.fsa.gov.uk/pubs/cp/cp10_19.pdf and it is worth taking a particular look at Annex 5 (reproduced in our PDF version attached) which, in its first part, sets out the proposals on the minimum obligations that all firms will be required to satisfy.

We would be interested to receive your comments on this matter, so please feel free to contact Kerry Kelly to discuss. 

6 August 2010 

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About Throgmorton: Throgmorton is one of the leading companies specialising in the provision of financial and administrative outsourcing in the UK SME financial services sector.

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