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Remuneration: financial services

Updating authors: Nick Thorpe
Consultant editor: Michael Sholem, Macfarlanes


  • The Financial Services Authority (FSA) (the predecessor to the Financial Conduct Authority (FCA)), introduced the original Remuneration Code on 1 January 2010 following concerns related to the remuneration policies of firms raised after the 2008/09 financial crisis. (See Background to the remuneration regime)
  • The Remuneration Code has been substantially revised and its scope extended since it was first introduced, most recently, to reflect the requirements of the Capital Requirements Directive (2019/878/EU) (CRD V), which came into effect on 29 December 2020. There are now six separate codes. (See Background to the remuneration regime)
  • The key aim of all the codes is to ensure that firms have risk-focused remuneration policies that are consistent with and promote sound and effective risk management. The codes take into account the remuneration requirements imposed by various EU Directives. (See Background to the remuneration regime)
  • The UK Brexit transition period ended on 31 December 2020. While future EU law will not apply in the UK, the European Union (Withdrawal) Act 2018 converted existing EU-derived legislation into UK law at the end of the transition period. (See Financial services post-Brexit)
  • All banks, building societies and investment firms designated by the Prudential Regulation Authority (PRA) and IFPRU firms authorised by the FCA are covered by one or more of the codes. Alternative investment fund managers (AIFMs), UK UCITS management companies and BIPRU investment firms authorised by the FCA are also covered. (See Which firms are covered by the Remuneration Code?)
  • The focus of this chapter is on the rules contained in the Remuneration part to the PRA Rulebook, SYSC 19D (governing dual-regulated firms), and SYSC 19G of the FCA Handbook. These rules apply to all material risk takers, including senior managers designated under the Senior Managers Regime from 2016. (See Which individuals are covered by the Remuneration Code?)
  • FCA SYSC 19D.3 contains 12 Remuneration Principles (See The PRA Rulebook and SYSC 19D principles). These principles apply to all banks, building societies and investment firms and govern their remuneration structures (See Remuneration structures). Broadly similar principles apply to AIFMs (See The Alternative Investment Fund Managers - Remuneration Code), UK UCITS management companies (See UCITS Remuneration code), BIPRU firms and Solvency II insurance and reinsurance firms (See Solvency II)
  • The MiFIDPRU Remuneration Code (FCA SYSC 19G) applies to all investment firms regulated by the FCA, including BIPRU, IFPRU and "exempt-CAD" firms. The code does not apply to dual-regulated firms. (See The MiFIDPRU Remuneration Code)
  • The PRA and FCA divide firms into three levels and adopt a different proportionate approach to the implementation of the Remuneration Principles. (See Proportionality)