The European Commission has issued a press release stating that it has adopted a Recommendation on remuneration in the financial services sector. The Commission has also published frequently asked questions on the Recommendation.
The Commission recommends that Member States should ensure that financial institutions have remuneration policies for risk-taking staff that are consistent with and promote sound and effective risk-management. The Recommendation sets out guidelines on the structure of pay, on the process of design and implementation of remuneration policies and on the role of supervisory authorities in the review of financial institutions' remuneration policies.
The Commission will follow up this Recommendation and the Recommendation on directors' pay with legislative proposals to bring remuneration schemes within the scope of prudential oversight. In June, the Commission will present proposals to revise the Capital Requirements Directive to ensure that regulatory capital adequately covers the risks inherent in banks' trading books, securitisation positions and remuneration policies.
View Recommendation on remuneration in financial services sector: FAQs, 29 April 2009