On 28 June 2013, the Financial Conduct Authority (the FCA) published its Policy Statement in respect of the implementation of the Directive in the UK.
However, due to constraints of time and resources, the FCA has chosen to defer its further consultation on certain matters which do not require to be in place from 22 July. In particular, it intends to defer consultation on the following remuneration aspects of the Directive until later in 2013:
- changes to the FCA Handbook to integrate the ESMA Guidance on the remuneration of key personnel, and remuneration reporting requirements; and
- guidance on a proportionality framework for remuneration requirements under which a Manager can disapply certain rules (such as deferrals and awards in instruments), if appropriate.
Pending further consultation, the FCA has indicated that it expects firms to consider their situation against the proportionality criteria provided in the ESMA Guidance. It notes that firms should be able to justify any disapplications they intend to make against these criteria.
The FCA has also confirmed that it will proceed with its proposed guidance that, where an overlap with the FCA Remuneration Code exists, compliance with the Directive will satisfy the requirements of the FCA Remuneration Code.
Once ESMA publishes the official version of its Guidance, the FCA will have two months to notify ESMA whether it will comply with them. The official version of the Guidance is expected very shortly and is very unlikely to change from ESMA’s final report, which was published in February of this year. Whilst the UK can depart from ESMA’s Guidance, if it considers this goes beyond the requirements of the Directive, material departures had been thought to be unlikely. However, the FCA has confirmed that it has “not yet determined” whether and to what extent it will comply with the ESMA Guidance and an announcement will be issued soon, via its website.
In the meantime, here is our updated summary of the relevant provisions of CP1, CP2, the draft UK Regulations and ESMA’s final report on its guidance, which sets out the story so far.