On November 1, 2018, the U.K. FCA published a letter (dated August 20, 2018) addressed to the Chair of the Remuneration Committee of banks and large investment firms (investment firms with total assets over £50 billion). The letter informs the Chair of how the FCA intends to assess the remuneration policies and practices of firms in 2018/19. Moreover, it sets out the impact of that approach for the Chair of the Remuneration Committee as a Senior Manager under the Senior Managers and Certification Regimes. The Chair of the Remuneration Committee of in-scope firms holds FCA Senior Manager Function 12. The FCA notes that its supervisors will be interacting with the Chair of the Remuneration Committee to ascertain how the Chair has determined that their firm's policies and practices promote the right behavior. The discussions will include an assessment of how any issues from the 2017/18 remuneration round have been addressed. The FCA also highlights that a Chair of the Remuneration Committee should be satisfied that the level of ex post adjustments are appropriate and be capable of providing reasons for these adjustments. In addition, the FCA is adopting the same approach as the PRA and will no longer provide a non-objection statement to the proposed communication or distribution of variable remuneration awards by banks and large investment firms.
The letter is available at: https://www.fca.org.uk/publication/correspondence/2018-letter-remco-chairs-our-approach.pdf and details of the PRA's approach to the latest remuneration round are available at: https://finreg.shearman.com/uk-prudential-regulator-issues-update-to-level-on.
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