Consultation opens
12/05/2023
Consultation closes
09/06/2023
Policy Statement
05/12/2023
05/12/2023
We set out, jointly with the Prudential Regulation Authority (PRA), our final policy on changes to the remuneration rules for dual-regulated firms to enhance the proportionality of the remuneration requirements that apply to small firms. We also respond to feedback to CP23/11.
We want to ensure our remuneration rules for smaller, less complex dual-regulated firms are proportionate to the risks they pose to consumers and markets in the UK. Therefore, we are making changes to proportionality thresholds, and exempting firms meeting the updated proportionality thresholds from the requirements relating to malus and clawback.
We are also making minor changes to the current rules to address some differences between the FCA Handbook and the PRA Rulebook.
Alongside this, we have made consequential amendments to our existing non-Handbook guidance to reflect these rules changes. Specifically, the:
This Policy Statement is relevant to UK banks, building societies, and PRA-designated investment firms, including third-country branches, which are subject to the Remuneration Part of the PRA Rulebook and the Dual-regulated firms Remuneration Code (SYSC 19D) of the FCA Handbook.
It will also be of interest to solo-regulated investment firms that are members of a group to which the Dual-regulated firms Remuneration Code applies on a consolidated basis.
The changes will come into force on 8 December 2023 and apply to a firm’s performance year starting on or after that date (8 December 2023). The PRA supervisory statement and FCA non-Handbook guidance changes will also apply from 8 December 2023.
In CP5/23[5], the PRA proposed to enhance the proportionality of the remuneration requirements that apply to small firms.
In CP23/11[6], the FCA proposed changes to its existing approach in SYSC 19D that were consistent with the changes proposed by the PRA. We also proposed to make consequential amendments to align with the PRA.
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