Information on carried interest categorised as remuneration - December 2021

Under the terms of the Freedom of Information Act, please could you share with me the following information.

1. In the past 12 months, has the FCA carried out any analysis on the subject of whether carried interest should be categorised as remuneration? If so:
   a) On what dates was this carried out
   b) Which division of the FCA carried this out
   c) What form did the analysis take, i.e. was a report produced?
   d) What was its conclusion?
    
2. Has the FCA carried out any analysis of whether carried interest should be categorised as remuneration in any previous time period? If so, please answer question 2 a-d in relation to this.

For question 1, we can confirm that in April 2021 our Strategy & Competition Division drafted and consulted on new policy under the Investment Firms Prudential Regime (IFPR). You can view the Policy Statement consulted[1]. Specifically, you may wish to refer to page 91 of the Policy Statement[1] which contains a section on carried interest.

Following the consultation, the conclusion was that the MIFIDPRU Remuneration Code applies to carried interest and we also added a rule which means that some variable remuneration requirements do not apply to carried interest arrangements that meet certain conditions.

For question 2, we cannot locate a record of any analysis being carried out. Though we would
like to refer you to our AIFMD Remuneration Code webpage[2] where we clarify our expectations
regarding carried interest.

We consider our approach to be consistent with those set out in the ESMA Guidelines on sound
remuneration policies under AIFMD[3] and EBA Guidelines on sound remuneration policies under
CRD[4] that the FCA previously adopted and that remain relevant following the FCA’s approach to
EU non-legislative materials[5] following our departure from the EU.