Remuneration standards: the application of proportionality

Legacy Supervisory Statement 8/13
Update on 23 June 2015: LSS8/13 has been updated primarily to reflect the references in the new Remuneration Part of the PRA Rulebook. The content and policy intent of the supervisory statement has not been changed.


Background

From its commencement on 1 April 2013, the Prudential Regulation Authority (PRA) has adopted a number of legacy Financial Services Authority (FSA) policy publications relevant to the advancement of its objectives. This document, initially issued by the FSA as General guidance on proportionality for remuneration FG 11/16, has been adopted by the PRA as a Supervisory Statement as part of this process. The PRA may choose to review this legacy publication at a later stage.

This Supervisory Statement details changes to the way in which proportionality is applied to the implementation of the Remuneration Code.

PDF Legacy Supervisory Statement 8/13 - June 2015 

Summary of the key issues

  • The Remuneration Code sets out the standards that banks, building societies and some investment firms have to meet when setting pay and bonus awards for their staff. The fundamental objectives of the remuneration policy are to sustain market confidence and promote financial stability through reducing the incentives for inappropriate risk taking by firms, and thereby to protect consumers. The need to ensure that firms’ remuneration policies and practices are consistent with and promote effective risk management is fundamental.
  • The changes in the approach to proportionality reflect the experience of implementing the Remuneration Code and remuneration disclosure since 2010.

Published on 1 April 2013

Background

From its commencement on 1 April 2013, the Prudential Regulation Authority (PRA) has adopted a number of legacy Financial Services Authority (FSA) policy publications relevant to the advancement of its objectives. This document, initially issued by the FSA as General guidance on proportionality for remuneration FG 11/16, has been adopted by the PRA as a Supervisory Statement as part of this process. The PRA may choose to review this legacy publication at a later stage.

This Supervisory Statement details changes to the way in which proportionality is applied to the implementation of the Remuneration Code.

PDF Legacy Supervisory Statement 8/13 

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