CRD IV/CRR—Remuneration requirements
CRD IV/CRR—Remuneration requirements

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • CRD IV/CRR—Remuneration requirements
  • Background and introduction to EU CRD IV and EU CRR
  • EU CRD IV and EU CRR remuneration requirements
  • The EU Material Risk Takers Regulation
  • Changes introduced by EU CRD V and EU CRR II
  • EU guidelines on EU CRD IV/CRR remuneration
  • Remuneration requirements for EU investment firms
  • FSB guidance and recommendations on remuneration
  • UK implementation of EU CRD IV/CRR and EU CRD V
  • FCA and PRA implementation of EU CRD IV
  • More...

This Practice Note discusses both (1) the EU remuneration provisions under the Capital Requirements Directive 2013/36/EU (EU CRD IV) and Regulation (EU) 575/2013 (EU CRR) and (2) the UK rules on remuneration including those that transposed the EU CRD IV requirements, those that were ‘onshored’ under Retained Regulation (EU) 575/2013 (UK CRR) and those that were introduced by the UK’s legislators and regulators after the UK withdrew from the EU in 2020. The rules relate to remuneration paid by credit institutions and investment firms to their staff.

Background and introduction to EU CRD IV and EU CRR

Following the financial crisis, the Financial Stability Board (FSB) and a number of national regulators conducted reviews into the governance and structure of remuneration arrangements within the financial services sector. The main conclusions drawn from these reviews were that:

  1. firms (and regulators) had failed to appreciate the extent to which remuneration policies and practices could encourage excessive risk-taking

  2. the structure of remuneration specifically could encourage excessive risk taking by focusing on cash-based, short-term incentives

  3. bonus pool calculations did not sufficiently take account of firms’ capital and liquidity costs and the risks they faced

  4. performance management systems often focused too heavily on financial performance and didn’t take into account multi-year performance

The FSB formalised the conclusions of its review into a set of FSB Principles for Sound Compensation Practices published on

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