On 3 August 2020, the FCA published Consultation Paper 20/14: Updating the Dual regulated firms Remuneration Code to reflect CRD V (CP20/14).
The following types of regulated firm need to read CP20/14:
- Credit institutions (banks and building societies).
- Designated investment firms (those designated for prudential regulation by the PRA).
- Firms from outside the European Economic Area that carry on activities from an establishment in the UK that mean they would be a credit institution or designated investment firm if they were a UK domestic firm.
- Firms in the same group as at least 1 of the types of firm in the previous 3 points above.
IFPRU investment firms should read the summary, and Chapters 2, 4 and 7 of CP20/14. Other investment firms that are prudentially regulated by the FCA, including BIPRU firms, only need to read the summary.
In CP20/14 the FCA proposes to update its Dual-regulated firms Remuneration Code (SYSC 19D) and relevant non-Handbook guidance. The proposals reflect the changes made by the Capital Requirements Directive V (CRD V) and are closely aligned with the approach taken by the PRA in its Consultation Paper on CRD V. The FCA is not a competent authority for the purposes of the CRD V but it is proposing in CP20/14 to amend its rules and guidance to ensure they remain largely consistent with the PRA’s approach, and to support its own conduct-based objectives
In its July 2020 consultation document on updating the UK’s prudential regime before the end of the transition period, HM Treasury clarified that it does not intend to apply the CRD V to FCA solo-regulated investment firms.
These investment firms remain subject to the existing rules in the IFPRU Remuneration Code or BIPRU Remuneration Code, as appropriate. The FCA is not proposing to reflect the CRD V changes in these Remuneration Codes. As part of its June 2020 Discussion Paper on a new UK prudential regime for MiFID investment firms, the FCA set out its initial views on what a new regime for these firms could look like. These include replacing the IFPRU and BIPRU Remuneration Codes with a new remuneration code.
The deadline for comments on CP20/14 is 30 September 2020.