While the FCA impressed upon the committee to focus on these “key” areas, it also informed them that it would now only be writing to it once every couple of years versus the current annual rate.
Along with the Prudential Regulation Authority, the FCA moved to scrap the cap on bankers' bonuses last week (25 October) in a bid to give firms more independent freedom to restructure their own pay allowances.
In a letter addressed to the chairs of the remuneration committees of UK financial services firms, executive director of consumers and competition Sheldon Mills said the changes were introduced to make the remuneration regime more «effective».
Through these changes, the regulator hopes to increase the «proportion of compensation at risk and subject to the incentive-setting tools in the remuneration framework».
FCA removes cap on bankers' bonuses to mixed reactions
Alasdair Steele, partner at law firm CMS, said: «Following the removal of the bonus cap for financial institutions, the FCA has stressed the importance of other remuneration tools for protecting financial businesses and their culture.»
«The FCA has noted the increased flexibility which variable remuneration gives firms but highlights their expectation that they should use tools such as risk metrics and performance criteria (including behavioural standards) to adjust remuneration appropriately,» he added.
In the letter, Mills said the key role of firms' remuneration committees was ensuring remuneration policies and practices incentivise a consumer-centred approach that ensures «good outcomes» for consumers across all products and services.
«No doubt you will also remain cognisant of inflationary pressures in the macro environment when considering your approach
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