Remuneration Code

A ‘thank you’ to those Complyport clients that submitted their comments and views to us on the proposed wordage of the Remuneration Code as set out in consultation paper CP10/19. These were duly submitted to the FSA on an anonymous basis (please see Annex 1 of policy statement PS10/20).

The final rules and guidance (which can be viewed in Annex B of PS10/20) came into effect on 1 January 2011 and appear in SYSC 19A. For the avoidance of doubt, the Remuneration Code will impact BIPRU firms and will not impact e.g. exempt CAD firms.

There is a basic requirement under SYSC 19A 2.1R for such firms to have in place appropriate remuneration policies. Complyport clients will already have received a foundation document which should satisfy the basic FSA requirements and which can be refined on an ongoing basis (should you not have received such a document then do please speak to your usual Complyport contact).

Any non-Complyport clients that have not yet addressed the need for a Remuneration Code policy may find the link to Regulatory Roundup 20 useful for providing a basic background to this issue.

In brief, the Remuneration Code is based upon twelve Principles, some of which apply firm-wide and some of which only apply to ‘Code staff’. It can be applied in a proportionate manner and to this end the FSA has issued guidance (see Appendix 2 of PS10/20). There are four tiers of proportionality – the majority of firms will fall within ‘proportionality tier four’, which will be BIPRU limited licence/activity firms. All firms are expected to be ‘broadly compliant’ with Principles 1 to 6, 9, 10 and 11 from 1 January 2011-although note the useful concession in 4.6 of PS10/20 in that any shortfalls should be identified and a time specific plan prepared to rectify them should be in place by the end of January. Principle 12 (‘Remuneration structures’) has captured the most attention from industry and by virtue of a Transitional Provision certain firms, including those in proportionality tier four, need to comply with these Rules by 1 July 2011.