The FSA has confirmed that the policy statement in response to its July 2010 consultation paper on revising its remuneration code (CP10/19), setting out the final Handbook rules, has been delayed, and will not now be published in November 2010 as originally planned, but is now likely to appear in December 2010. (This results from delays in finalising the Committee of European Banking Supervisors’ (CEBS) guidelines on implementation of the remuneration principles in the amendment to the Capital Requirements Directive (2006/48/EC and 2006/49 EC) (CRD3) now also due in mid-December 2010.)
On 10 November 2010, the FSA published a consultation paper on remuneration disclosure (CP10/27) in which it outlined its proposals to implement the requirements of CRD3 relating to the disclosure of remuneration. CRD3 will require firms to disclose information on their remuneration on an annual basis (under the Basel Pillar 3 framework). Among the matters on which the FSA is now consulting are:
- items to be disclosed: this includes information on the remuneration decision-making process, the design characteristics of a remuneration system and aggregate quantitative information on total remuneration, variable remuneration, deferred remuneration and sign-on and severance payments;
- the frequency of disclosures: the FSA proposes to require firms to make their first disclosures in respect of 2010 remuneration as soon as practicable, but no later than 31 December 2011;
- the form of disclosure: disclosure is proposed to take the form of a stand-alone report or it may be included in the firm's annual report and accounts; and
- proportionality: CRD3 allows regulators to apply its requirements on a proportionate basis, taking into account a firm’s size and complexity, and the FSA proposes to divide firms into four tiers for this purpose, based principally on their regulatory capital and type of permission, each tier being subject to a different degree of disclosure.
The FSA is also considering extending the scope of the disclosure requirements to non-EEA firms operating as branches in the UK, and depending on the responses to the present proposals, it may consult on this issue separately in Q1 of 2011.