Remuneration Code
The stated aim of the FSA/FCA's Remuneration Code is "To ensure that firms have risk-focused remuneration policies which are consistent with and promote effective risk management and do not expose them to excessive risk."
The Code applies to all BIPRU and third country BIPRU firms. However, guidance produced to accompany the revised requirements provides for proportionate application, particularly of those requirements relating to remuneration structures. Limited licence and limited activity firms fall into "proportionality level three", with the least onerous requirements.
Firms must identify those individuals who are "Code Staff" (broadly those undertaking significant influence functions, any other 'risk takers' and others in the same remuneration bracket as these two categories of staff). Code Staff need to be made aware of the implications and must undertake not to enter into personal investment strategies or other arrangements that might undermine the risk mitigating elements within their remuneration.
The revised code applies 12 remuneration principles, covering matters such as governance over remuneration, structure of remuneration and avoidance of conflicts of interest.
In relation to the Remuneration Code the FSA/FCA have stated that they will ensure that it is "rigorously applied". Watch this space for enforcement action in due course.