In partnership with the Prudential Regulation Authority (PRA), we are consulting on revisions to the current Remuneration Code following the recommendations put forward by the Parliamentary Commission on Banking Standards.
Why are we consulting on this?
This joint FCA and PRA consultation paper seeks views on proposed changes to rules in the area of Remuneration.
The paper follows both regulators’ responses in October 2013 to the final report of the Parliamentary Commission on Banking Standards (PCBS), ‘Changing Banking for Good’. It sets out proposals for revised rules on Remuneration which would be incorporated in the PRA Rulebook and the FCA Handbook.
The paper can be read alongside CP14/13, which sets out our joint proposals for increasing individual accountability in banking.
Who is this Consultation Paper aimed at?
These changes will affect UK-regulated banks and building societies as well as the PRA-designated investment firms which are dual regulated by the PRA and FCA.
What is the background to this?
The behaviour and culture within banks played a major role in the 2008-09 financial crisis and in conduct scandals such as PPI mis-selling and the attempted manipulation of LIBOR. However, under the statutory and regulatory framework in place at the time, individual accountability was often unclear or confused. This undermined public trust in both the banking system and in the regulatory response.
In June 2012, the Government established the PCBS to consider and report on these issues. It concluded that public trust in banking was at an all-time low and recommended a series of measures to restore trust and improve culture. These recommendations proposed a new framework for approving and holding individuals to account alongside other measures, including recommendations regarding remuneration and whistleblowing, latest documents below:
- CP14/13 Strengthening accountability in banking: a new regulatory framework for individuals
- Financial Incentives for Whistleblowers
What are the next steps?
We want to hear what you think of our proposals. So please send your responses to both regulators at the following addresses: firstname.lastname@example.org or CP15_14@bankofengland.co.uk by Friday 31 October 2014.
We would welcome views from respondents to this CBA, including additional costs or benefits that are not captured in this analysis.
The regulators will share responses publicly, unless you specifically ask for them to remain confidential.
Please note that the consultation includes questions specifically posed by only one regulator as well as joint questions from both regulators. You should note that responses to:
- PRA only questions will be considered by the PRA only
- FCA only questions will be considered by the FCA only, and
- responses to joint questions will be discussed by the PRA and FCA.
The PRA and FCA each plan to publish Policy Statement(s) containing their respective final rules around the end of the year. A technical CP will follow this one in due course.