On November 4, 2014, the Financial Stability Board (“FSB”) issued a third progress report on the implementation of its Principles for Sound Compensation Practices and their Implementing Standards (“P&S”). The Principles are aimed at all significant financial institutions, especially systemically important institutions, to bring compensation practices in line with prudent risk-taking. The Implementation Standards are intended to strengthen FSB jurisdictions’ adherence to the Principles. The FSB report deals with remaining implementation gaps, and its main findings are that: (i) implementation is generally complete although the P&S do not apply or are incompatible with certain jurisdictions, and in such cases, the FSB recommends that appropriate action is taken to address any possible risks in those jurisdictions; (ii) supervision of compensation practices by regulatory authorities has generally improved, though different methods of supervision are used across various jurisdictions, and areas that could be improved have been identified, such as compensation governance and the identification of material risk takers; and (iii) the level of implementation by significant banks has generally  been assessed by national regulators to be medium or high. The FSB will organize a roundtable meeting in early 2015 to discuss trends and views on the implementation process, and any remaining challenges.

The report is available at:.