Abstract
Purpose â The purpose of this paper is to explain the final version of the Remuneration Code, published by the Financial Services Authority (FSA) in December 2010, which deals with remuneration in the financial services industry and incorporates requirements contained in the latest version of the European Union (EU) Capital Requirements Directive (CRD3). Design/methodology/approach â The paper gives an overview of the Code, focusing on its scope; the deadlines for compliance; the constraints on variable remuneration; the proportional application of the Code through the division of businesses covered by the Code into four tiers, each with different compliance requirements; and voiding provisions â i.e. provisions which render certain contractual terms on variable remuneration void if they breach Code requirements. It also summarizes the related and new obligations on disclosure of remuneration, which were published by the FSA at the same time as the Code. Findings â The overriding objective of the Code is to ensure that remuneration policies, procedures and practices do not undermine effective risk management. Practical implications â Now the details have been published and deadlines for compliance set, it is imperative that those in the financial services industry with UK operations, whether in the UK or elsewhere, start taking steps straightaway to ensure that their remuneration policies, practices and procedures are compliant with the new regulatory regime. Originality/value â The paper provides practical guidance from experienced securities lawyers.
Purpose â The purpose of this paper is to explain the final version of the Remuneration Code, published by the Financial Services Authority (FSA) in December 2010, which deals with remuneration in the financial services industry and incorporates requirements contained in the latest version of the European Union (EU) Capital Requirements Directive (CRD3). Design/methodology/approach â The paper gives an overview of the Code, focusing on its scope; the deadlines for compliance; the constraints on variable remuneration; the proportional application of the Code through the division of businesses covered by the Code into four tiers, each with different compliance requirements; and voiding provisions â i.e. provisions which render certain contractual terms on variable remuneration void if they breach Code requirements. It also summarizes the related and new obligations on disclosure of remuneration, which were published by the FSA at the same time as the Code. Findings â The overriding objective of the Code is to ensure that remuneration policies, procedures and practices do not undermine effective risk management. Practical implications â Now the details have been published and deadlines for compliance set, it is imperative that those in the financial services industry with UK operations, whether in the UK or elsewhere, start taking steps straightaway to ensure that their remuneration policies, practices and procedures are compliant with the new regulatory regime. Originality/value â The paper provides practical guidance from experienced securities lawyers.