Deciphering The Remuneration Codes

Author:Mr Nicholas Thompsell and Simon Maharaj
Profession:Field Fisher Waterhouse


Pay in the financial services sector used to be so simple. You agreed a package with the employee and that was it. If your company was listed there might be a code of corporate governance that had some bearing on this, but those provisions were light and went more to the process for setting pay than how pay should be structured. Then came the financial crisis. The regulators and politicians decided that one of the causes of this was an excessive bonus culture in the banking sector. Result: new rules on remuneration.

The Financial Services Authority (FSA) was an early adopter of a remuneration code, subsequently revising this when Europe caught up with the implementation of the Third Capital Directive (CRD III). The adoption of the Fourth Capital Directive (CRD IV) has more recently caused some further changes and has led to the Financial Conduct Authority (FCA) dividing firms previously affected by its old Remuneration Code into firms affected by its (revised) Remuneration Code (essentially affecting banks and building societies) and a new "BIPRU Remuneration Code" for other MiFID firms.

What was good for the banks must, it was assumed, also be good for investment managers and the next opportunity was...

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