On 21 April 2011, the FSA published a number of draft guidance documents to assist firms in complying with the revised FSA Remuneration Code (the "Code"). The revised Code came into force on 1 January 2011 implementing the remuneration principles contained in the amendments to the Capital Requirements Directive. The draft guidance documents provide general guidance on certain aspects of the Code and also include templates which firms subject to the Code can use to document compliance.
The guidance documents have been published by the FSA subject to consultation, which is open for responses until 18 May 2011, although the FSA has stated that firms may begin using the templates immediately.
Remuneration Policy Statement templates (Tier 2, 3 and 4 firms)
The draft templates, one for Tier 2 firms and one for Tier 3 and 4 firms, are designed to assist firms to document their remuneration policies, practices and procedures, as required by the Code.
The templates set out the questions the FSA are likely to ask in conducting a review of a firm's remuneration policies and indicate the level of detail the FSA expects. While it will not be compulsory to use the templates, the FSA considers that it would be good practice for firms to do so and that, even if firms choose not to use them, they should still ensure that all the information indicated by the templates is recorded in a clear and structured way.
Included as an annex to the templates are template Code Staff lists, which indicate the information that the FSA expects firms to record in respect of their Code Staff.
Other guidance documents
The FSA has also published the following draft guidance documents:
- Guaranteed Variable Remuneration. Guidance has been produced in relation to guaranteed variable remuneration provided as both sign-on and retention bonuses. In particular, the guidance addresses whether prior notification to the FSA is required.
- Retention Periods. This guidance provides the FSA's view as to the appropriate retention period that should apply to shares or other instruments paid as part of variable remuneration, as well as to how firms can structure the retention of shares or instruments where a tax withholding obligation (such as PAYE) exists.
- Remuneration Code FAQs. The FAQs are intended to address some of the most common questions raised by in-scope firms in relation to the Code, and address issues including the scope of the Code, the designation of Code Staff and the application of proportionality in determining how the Code applies to specific firms.
To access the proposed guidance documents, including the proposed Remuneration Policy Statement templates, please click here.
To read a copy of our earlier briefing on the revised Remuneration Code, please click here.