PRA and FCA have issued a joint statement notifying EBA that the regulators will fully comply with EBA guidelines on Sound Remuneration Policies with the exception of the provision that the limit on awarding variable remuneration to 100% of fixed remuneration, or 200% with shareholder approval (the bonus cap), must be applied to all firms subject to the Capital Requirements Directive (CRD). Both regulators disagree with the approach proposed. Instead, they believe that a proportionate, risk-based approach to applying the bonus cap should be used based on the wording in the CRD. PRA and FCA believe that the shift to fixed remuneration makes it more difficult for firms to adjust variable remuneration to reflect their financial health, and that the blanket extension of the bonus cap to all CRD firms would exacerbate this and fail to recognise the different incentives and consequences for risk-taking across all CRD-regulated firms. (Source: Regulators’ compliance statement for Sound Remuneration Policies)