Our Remuneration Codes set out the standards and policies that certain firms are required to meet when setting pay and bonuses for staff. Find out more about the Codes, who they apply to, our main requirements and proportionality. Information can also be found on latest developments and resources on sales incentives.

Inappropriate remuneration policies were widely identified as a contributory factor to the financial crisis. Our predecessor organisation, the Financial Services Authority, was the first major financial regulator to respond with the introduction of a Remuneration Code and there is now growing international recognition of the role of remuneration on firm conduct.

The aim of the FCA’s Remuneration Codes is to:

  • ensure greater alignment between risk and individual reward
  • discourage excessive risk taking and short-termism
  • encourage more effective risk management, and
  • support positive behaviours and a strong and appropriate conduct culture within firms

This supports our statutory objectives of enhancing market integrity and protecting consumers by ensuring incentives do not encourage excessive risk-taking or misconduct.

We have five Remuneration Codes tailored to different types of firm:

Codes applying to your firm

The Codes apply to more than 3,000 firms, including:

  • banks
  • building societies
  • large full-scope UK alternative investment fund managers
  • Capital Requirements Directive (CRD) investment firms such as broker-dealers, investment managers, corporate finance, private equity and venture capital firms and operators of multilateral trading facilities
  • Management companies of undertakings in collective investments in transferrable securities (UCITS)

While the requirements set out in the Remuneration Codes do not apply to all types of firm regulated by the FCA, appropriate remuneration practices are relevant for sound and effective risk management at all firms.

Principal requirements

All applicable firms must make sure their remuneration policies and practices are consistent with and promote sound and effective risk management.

This includes the following:

  • At least 40% of a bonus must be deferred over a period of at least three years. At least 60% must be deferred for the most senior management (for SYSC 19A and SYSC 19D only) or when an individual’s bonus is a particularly high amount.
  • At least 50% of a bonus must be made in shares, share-linked instruments or other equivalent non-cash instruments (or units of shares of the alternative investment fund for firms subject to SYSC 19B or units or shares of the UCITS, equivalent ownership interests in the UCITS, share-linked instruments relating to the UCITS concerned, or equivalent non-cash instruments with equally effective incentives). These shares or instruments should be subject to an appropriate retention period.
  • Ensure guarantees are only given in exceptional circumstances to new hires for the first year of service.
  • Ensure senior management adopts and periodically reviews the general principles of the remuneration policy and ensures its implementation as well as disclosure of details of their firm’s remuneration policies at least annually.
  • Variable remuneration is risk-adjusted and ensures performance is assessed with respect to financial and non-financial factors and is based on the performance of the individual, business unit concerned and the overall results of the firm.
  • Ensure that any variable remuneration, including a deferred portion, is paid or vests only if it is sustainable according to the financial situation of the firm as a whole, and justified on the basis of the performance of the firm, the business unit and the individual concerned.


The FCA has adopted a proportionate approach to implementing the Remuneration Codes. Some of the features of the Remuneration Codes apply to a firm as a whole while other requirements, such as those on the structure of awards, apply mainly to material risk takers (MRTs), also referred to as Code staff or identified staff. These are individuals who are:

  • senior management
  • risk takers and staff in control functions, and
  • those earning in the same remuneration bracket

For firms subject to SYSC 19A or SYSC 19D, Commission Delegated Regulation (EU) No 604/2014 sets out further examples of categories of staff that must be identified.

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.​

Sales incentives

We have conducted supervisory work where we looked at the risks to customers from financial incentives of staff or representatives dealing directly with retail customers.

Following engagement with industry to identify the risks to customers from financial incentives of staff or representatives dealing directly with retail customers. We published final guidance in January 2013 (on financial incentives) and July 2015 (on performance management) to assist firms in mitigating the risks to consumers that could arise through their incentive schemes and performance management of staff. We also conducted follow up thematic work into financial incentives which assessed whether firms are now managing the risks to consumers.

We are currently looking at how consumer credit firms pay and incentivise their staff and manage the risks arising from these reward arrangements.

Further information on performance management.

Further information on financial incentives.


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