FCA and PRA have issued a joint statement on the findings from the FSB’s peer assessment of the effectiveness of remuneration reforms in the financial sector. FCA has also updated a webpage to highlight the publication of the statement.
FCA and PRA welcome the findings of the FSB’s review which highlight that the UK’s approach is consistent with the FSB’s Principles and Implementation Standards for Sound Compensation Practices, and note the effectiveness of the UK’s domestic framework and the strong collaboration between PRA and FCA.
FCA and PRA are pleased that the report notes that UK authorities recognise the importance of remuneration for setting incentives that are consistent with effective risk management and prudent decision making, to support the long-term viability of firms.
The review team have, however, made four targeted recommendations to further strengthen the UK’s remuneration framework. These include:
- reviewing the interaction between the UK’s remuneration regimes and the SM&CR;
- improving the efficiency of data collection;
- considering other supervisory approaches for assessing the effectiveness of the regime;
- and providing additional guidance to the insurance sector.
FCA and PRA have stated that they will continue to work together to take these forward when delivering on their regulatory objectives.