The Financial Services Authority has announced its intention to introduce changes in Remuneration Code in light of the implementation of the Capital Requirements Directive (CRD 3) and the Financial Services Act 2010 (the 2010 Act). The Remuneration Code is currently relatively consistent with CRD 3 and the 2010 Act, changes have been made by the FSA to ensure improved alignment including:-

  • the scope of the Remuneration Code will be strengthened by applying a proportional approach to implementation and will ensure that institutions comply with the principals in a manner which is appropriate with regards to their size, internal organisation and the nature, complexity and scope of their activities;
  • a percentage of bonuses awarded to "code staff" must be deferred over a period of three years. The percentage amount to be deferred increases from 40% to 60% where the bonus award is greater than £500,000.00;
  • a minimum of 50% of any variable remuneration components must be made in shares (subject to a minimum retention policy, share-linked instruments or other equivalent non cash instruments of the firm;
  • firms must not offer guaranteed bonuses of more than one year;