The FCA published its 2022/23 letter to Remuneration Committee Chairs of proportionality level one Banks, Building Societies and PRA designated investment firms on 2 August 2022.
As in previous years, key areas of focus remain ensuring that remuneration policies foster a strong culture of risk-management and accountability and promoting ESG considerations and diversity and inclusion in the financial services sector. In particular, the FCA signals its expectation of robust challenge from Committee Chairs where there is evidence of regulatory failings and its intention to consult on a package of measures to promote D&I in the financial services sector later in the year. Firms may wish introduce ESG metrics into their remuneration arrangements to align with any commitments on how they will support the transition to a net zero economy.
The FCA notes that firms' remuneration policies should support the Consumer Duty when it comes into effect, that firms should take the rising cost of living into consideration when designing and reviewing remuneration policies and practices, and that Remuneration Committees should consider whether making remuneration adjustments may be appropriate in the event of service disruptions, given their potential to cause wide-reaching harm.
The letter ends with a reminder that firms with an accounting reference date of 31 December should submit their remuneration policy statement (RPS), Annex 1: malus and RPS tables by 31 August 2022 (the deadline for the RPS being no later than eight months after the end of the preceding financial year).
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