On November 12, 2015, the EBA published a report on the steps taken by national authorities to ensure that firms that had introduced role-based allowances as fixed remuneration had taken, or were taking, steps to revise their remuneration policies. Role-based allowances were introduced by some firms following the introduction of the EU bonus cap, a limit of the ratio between the variable and fixed parts of remuneration of 100%. The EBA published an Opinion in October 2014 in which it stated that role-based allowances that are not predetermined, transparent to staff, permanent and that provide incentives to take risks are not compliant with the requirements under the CRD. The EBA had asked national regulators to ensure that remuneration policies complied with its Opinion by December 31, 2014. The EBA’s report confirms that national regulators have taken such measures although some of those will only be effective for remuneration awarded for the performance year 2015. The EBA intends to include criteria on classifying remuneration as either fixed or variable in its guidelines on sound remuneration policies. It is also working with the European Commission to review whether the CRD requires further reinforcement in this area.
The report is available at: http://www.eba.europa.eu/documents/10180/950548/Report+on+the+Use+of+Allowances.pdf.