In this Policy Statement (PS), we set out our final rules on remuneration for dual-regulated firms and the revised versions of the relevant guidance documents. This PS summarises the feedback we received during the consultation period and our response to it.
Further to the PRA's statement, we intend to consult at the next suitable opportunity to make a corresponding amendment to the Dual-regulated firms Remuneration Code. This is to ensure that our remuneration requirements for dual-regulated firms remain consistent with the PRA's approach.
We have revised relevant general guidance documents to reflect the changes made to the Dual-regulated firms Remuneration Code. Read this PS in conjunction with our finalised guidance documents:
What we are changing
In May 2019, the European Union (EU) adopted the fifth Capital Requirements Directive (CRD V) which EU Member States and the UK are required to transpose by 28 December 2020.
As CRD V amends certain remuneration provisions, we proposed in CP20/14 to amend the Dual-regulated firms Remuneration Code (SYSC 19D) and relevant non-Handbook guidance to reflect these changes.
We also consulted on making consequential changes to address deficiencies arising from the UK’s exit from the EU.
Our final rules and guidance on remuneration for dual-regulated firms remain broadly consistent with the Prudential Regulation Authority’s (PRA) in a way that supports our own objectives.
We want to support firms to approach remuneration in a way that drives positive behaviours and healthy cultures, and deters behaviours that are likely to harm consumers or markets.
Our changes will ensure that firms can operate stronger risk management, implement higher levels of individual accountability and better incentivise their staff to make decisions not involving short-term or excessive risks. This in turn will contribute to reducing the number of misconduct incidents in these firms and, where misconduct does occur, the level of harm it causes.
Who this applies to
This PS is relevant to firms in scope of the Dual-regulated firms Remuneration Code:
- credit institutions (banks and building societies)
- PRA-designated investment firms
- overseas firms that would be a credit institution or a UK designated investment firm if they had been a UK domestic firm
While this PS does not affect FCA solo-regulated investment firms which are subject to other remuneration codes, it will be of interest to solo-regulated investment firms that are members of a group to which the Dual-regulated firms Remuneration Code applies on a consolidated basis.
The new Handbook rules and guidance will come into force on 29 December 2020. Firms are required to apply the new rules and guidance from the next performance year starting on or after 29 December 2020.