The EBA published a report on 12 November 2015 as a follow up to its Opinion issued in October 2014 on the use of allowances as a form of fixed remuneration.
The EU declared that lump sum allowances that are not predetermined, transparent or permanent and that provide incentives to take risk are variable remuneration and count as bonuses for the purposes of the cap. Role-based allowances can still be paid as fixed remuneration and so fall outside the scope of the cap.
The EBA report considered whether Competent Authorities had been monitoring banks to make sure that they had made the requisite changes to their remuneration policies following the publication of the Opinion.
The EBA report noted that the Guidelines on sound remuneration are expected to be finalised by the end of 2015. It is evident that many Competent Authorities are awaiting the publication of these Guidelines before they take steps to draft any laws in this area.
The EBA is also working with the European Commission to review the provisions on remuneration, including identifying whether the legislation requires further reinforcement in this area.
In the meantime, those effected are looking for other means to circumvent the cap, including bumping up holiday allowances to create an entitlement to payment in lieu of untaken leave. Others have considered the payment of loans on a non-redeemable basis.