The European Banking Authority (EBA) has today published draft guidelines on remuneration policies for public consultation. These guidelines seek to clarify how firms and regulators should interpret the remuneration rules in CRD IV. These guidelines would effectively remove the proportionality principle for smaller firms.
CRD IV gives Member States flexibility to apply the rules in a proportionate way, including the rules on remuneration. This is an important part of the Directive and it helps to manage the impact on smaller firms. The FCA prudentially regulates approximately 1,000 firms under CRD IV and applies the proportionality principle to the smaller of these firms, given in particular its importance to our competition duty.
These guidelines are not final at this stage. However, we strongly encourage firms to consider them, the likely impacts on their business, and respond to this consultation. It is open for three months after which the EBA will consider the feedback received and draft final guidelines for publication.
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