The following Financial Services guidance note Produced in partnership with DLA Piper UK LLP provides comprehensive and up to date legal information covering:
This Practice Note explains the high-level requirements of the Remuneration Code for Dual Regulated Firms (the Code) set out in SYSC 19D of the FCA Handbook. The code sets out the standards that all dual-regulated firms within the scope of CRD IV (namely banks, building societies and PRA-designated investment firms) must meet when setting their pay and bonus awards for staff.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) (together the Regulators) have a duty under the Financial Services and Markets Act 2000 (FSMA 2000) to ensure that authorised firms have a remuneration policy which is consistent with the effective management of risk. For further guidance on risk control see Practice Note: Risk control—post MiFID II implementation.
The FCA's predecessor, the Financial Services Authority (FSA) published the original Remuneration Code in February 2009 as part of the FSA's response to the global economic financial crisis.
The crisis exposed the fact that remuneration frequently gave incentives to staff to take excessive risk or engage in poor conduct that undermined the impact of systems designed to control risk and gave rise to significant detriment to the financial system.
The aim of the original Remuneration Code, which applied with effect from 1 January 2010, was to ensure greater alignment between risk
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