AIFM Remuneration Code (SYSC 19B)

The FCA AIFM Remuneration Code (SYSC 19B) applies to full-scope UK Alternative Investment Fund Managers (AIFMs)


The AIFM Remuneration Code sets out the standards and policies that AIFMs have to meet when setting pay and bonus awards for their staff.

Further details on how full-scope UK AIFMs should comply with the remuneration requirements under the AIFMD are set out in the ESMA Guidelines on sound remuneration policies under the AIFMD.

We have adopted a proportionate approach to implementing the AIFM Remuneration Code. This approach is set out in General guidance on the AIFM Remuneration Code (SYSC 19B). The guidance requires full-scope UK AIFMs to comply with the Code in a way and to the extent that is appropriate to their:

  • size
  • internal organisation, and
  • the nature, scope and complexity of their activities

Our guidance on the AIFM Remuneration Code includes further information on application to partnership structures, payment in units, shares or other instruments as well as other guidance on remuneration.

Non-cash instruments

There may be circumstances where making awards in non-cash instruments linked to the AIF may be impractical or disproportionate and where non-cash instruments linked to the AIFM may be justified instead.

Where a firm is able to justify that this is the case, it may use suitable non-cash instruments linked to:

  • the AIFM or its parent company, or
  • to the performance of a weighted average of the AIFs managed by the AIFM

Where the management of AIFs accounts for less than 50% of the total portfolio managed by the AIFM, the requirement to award at least 50% of any variable remuneration in non-cash instruments does not apply. This means that firms may determine a lower appropriate minimum level for their firm (SYSC19B.1.17R(1)).

For further details on the justifications and types of non-cash instrument that the FCA would consider to be acceptable, please see Section 5 'Remuneration in the form of units, shares or other instruments' of the guidance document above.

This does not affect our existing guidance which allows for the disapplication of a requirement for a firm that is not significant (see 'Section 3'), or for particular individuals awarded variable remuneration below the thresholds set out in 'SYSC19B.1.13AG'.

Pay-out process rules

AIFM Code staff not employed by the AIFM

If an individual would otherwise be identified as a member of AIFM Code staff but is not employed by the AIFM, the individual is still subject to the pay-out process rules.

The requirement of 'SYSC19B.1.3R' to identify categories of staff whose professional activities have a material impact on the risk profile of the AIFM or the AIF the AIFM manages applies.

Where an AIFM has delegated portfolio risk management, Section 3 of 'FG14/02' also makes clear that delegates are to be subject to remuneration requirements that are equally as effective directly or by contractual arrangement in line with para 18 of 'ESMA Guidelines'.

Carried interest and co-investment schemes

Carried interest plans are considered remuneration for the purposes of the Remuneration Code, as stated in ('SYSC 19B.1.4R(3)'). However, this is not the case where arising solely from an individual's return on a co-investment arrangement. This is an investment return rather than a form of remuneration and is not subject to the AIFM Remuneration Code as explained in example 7 of the annex to 'FG14/02'.

Further clarity on this point can be found in Paragraph 13 of the 'ESMA Guidelines'.

Example 7 in the annex of 'FG14/02' sets out our view that a case can be made on proportionality grounds for relevant staff in certain circumstances to disapply the pay-out process rules on carried interest. This would only be the case where a firm is able to demonstrate that:

  • existing arrangements satisfy the objectives of alignment of interest with investors. This should include application of many of the same principles
  • appropriate clawback or make-up arrangements are in place.

Capital Requirements Directive IV group firms

In accordance with 'SYSC 19A.3.1R' and 'SYSC 19D.3.1R', a firm subject to the CRD remuneration codes (i.e. SYSC 19A or SYSC 19D) must apply the requirements for material risk takers at group, parent undertaking and subsidiary undertakings levels.

'SYSC19B.1.1R' explains that the AIFM Remuneration Code applies to the full-scope UK AIFM. It follows directly from this that in certain instances a firm may be subject to both Directives.

The EBA guidelines on sound remuneration practices clarify the EBA's position that the CRD IV remuneration rules apply at the subsidiary level to employees of an AIFM who have a material impact on the risk profile of the group.

Employees who only have a material impact on the risk profile of the AIFM subsidiary would not be subject to the CRD remuneration rules and should apply the requirements of the AIFM Remuneration Code.

Self-assessment template and tables for AIFMs

Use our RPS template for AIFMs to record your remuneration policies, practices and procedures and assess compliance with the Code.

Our RPS table for AIFMs allows you to keep a record of all AIFM Remuneration Code staff identified for the current performance year.

Further information and guidance