On 29 July 2010, the Financial Services Authority (FSA) published a consultation on revising the Remuneration Code (the Code). The revised Code will apply to a wider range of financial institutions, extending its scope to approximately 2,500 firms. Although there are de minimis provisions, the Code is directed at ‘code staff’ – which includes individuals who perform functions of significant influence for a firm, senior managers and staff whose remuneration takes them into the same bracket as senior managers and risk takers (if their activities could have a material impact on a firm’s risk profile).

The revised Code also deals with: the balance between fixed and variable remuneration; the proportion of variable remuneration to be paid in shares; deferral of variable remuneration; performance adjustment; guaranteed bonuses; and severance payments.

The revised Code will take effect on 1 January 2011 and will apply to all remuneration awarded or paid from 1 January 2011. It will also apply to remuneration awarded, but not yet paid, before 1 January 2011 for services provided in 2010. The FSA intends to police compliance by means of electronic returns that will certify compliance with the Code. Some ‘high impact’ firms will have to submit an annual remuneration policy statement before their bonus season.