FCA has written to the Chairs of regulated firms’ Remuneration Committees setting out its findings and observations from the 2019/20 remuneration round.
Its key point is that culture is a key area of focus, and that firms should not deprioritise that focus as they redirect resources to respond to the immediate and longer-term effects of Covid-19. Firms a remuneration and recognition practices are important drivers of culture and so remain of key importance.
FCA also notes firms must consider their approach to diversity and inclusion as an important part of healthy culture. On both points, FCA saw good practices through the year.
Ongoing, it will continue to assess how policies have evolved in the light of the pandemic and will continue to ask firm how they have satisfied themselves that their remuneration policies reinforce healthy cultures and promote the right behaviours. Supervisors will continue to engage as appropriate with firms on responses to any risk and performance issues.
Turning to the effects of the current environment, FCA notes that risks may now exist that will have a negative impact on diverse and inclusive cultures.
Finally, FCA wants firms to submit, alongside their Remuneration Policy Statements, a short summary of the key points in them and an explanation of how the firm has assured itself that its overall remuneration policies drive behaviour that reduced potential harm.