The FSA has published Consultation Paper 10/27 – Implementing CRD3 requirements on the disclosure of remuneration. The CP outlines the changes to the implementation of remuneration disclosure requirements based on Capital Requirements Directive (CRD3). CRD3 requires firms to disclose information on their remuneration policies and pay-outs on an annual basis. This is to be included in their disclosures under Basel Pillar 3. Many important requirements are derived from the Financial Stability Board’s principles and standards on remuneration disclosure.
The FSA is consulting on the following:
- Items to be disclosed such as information on the remuneration decision-making process;
- Frequency of disclosure: firms will need to disclose details of their remuneration policies at least on an annual basis;
- Form of disclosure: should disclosure take the form of a stand-alone report or be included in a firm’s annual report and account; and
- Proportionality: CRD3 permits regulators to apply the rules on a proportionate basis, taking account of firms’ size and complexity. The FSA intends to divide firms into four tiers based primarily on their regulatory capital and type of regulatory licence or permission. Each group will be subject to a different degree of disclosure.