CRD IV/CRR remuneration requirements in the UK

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

  • CRD IV/CRR remuneration requirements in the UK
  • Background and introduction to EU CRD IV and EU CRR
  • UK implementation of EU CRD IV/CRR and EU CRD V
  • FCA and PRA implementation of EU CRD IV
  • Changes introduced by the PRA to transpose EU CRD V
  • Changes introduced by the FCA to transpose EU CRD V
  • UK approach to following EBA guidelines on EU CRD IV/CRR remuneration
  • The UK remuneration codes
  • Which codes apply to which firms?
  • Categories of staff to whom the CRR Remuneration Codes apply
  • More...

CRD IV/CRR remuneration requirements in the UK

This Practice Note discusses the UK rules on remuneration, including those that transposed the EU Capital Requirements Directive 2013/36/EU (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 25 September 2009. National regulators then began to draw up plans for

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