CP13/6 - CRD IV for Investment Firms - Financial Conduct Authority

This document has no legal effect and it has been prepared with tracked changes to show
the proposed amendments to the existing guidance that are being consulted on in this CP.
PART F:
REMUNERATION COMMITTEES
General
42. Remuneration Principle 4 (Governance) provides, in SYSC 19A.3.12R(1), that a
firm that is significant in terms of its size, internal organisation and the nature, the
scope and the complexity of its activities must establish a remuneration committee.
43. The following table provides guidance on when we consider it would be
appropriate for a remuneration committee to established under SYSC 19A.3.12R,
based on the proportionality level into which the firm falls (as determined in
accordance with Part C of this guidance statement (as supplemented by Appendix
1)):
Table 4:
Guidance on whether remuneration committee required
Proportionality level
Proportionality level one
Proportionality level two
Proportionality level three
SYSC 19A.3.12R remuneration
committee?
A remuneration committee should be
established.
A remuneration committee should be
established.
It would be desirable for such a
remuneration committee to be established,
and we would normally expect larger
proportionality level three firms to do so.
But we accept that it may be appropriate
for the governing body of the firm to act as
the remuneration committee.
Subsidiaries of overseas groups / third country BIPRU firms
44. This guidance relates, broadly speaking, to a Remuneration Code firm which is a
third country BIPRU firm, or a BIPRU firm that is part of a group not subject to
consolidated supervision by the FSA.
45. We accept that it may be possible for certain such firms to justify on the ground of
proportionality not establishing under SYSC 19A.3.12R at solo level a
remuneration committee of the Remuneration Code firm. However, in such
circumstances it would be necessary to show how the functions which would
otherwise have been performed by such a remuneration committee would be
discharged with sufficient authority, and with sufficient independence from those
performing executive functions within the firm. Where, for example, members of
the governing body of the firm acted together with a group remuneration committee
to discharge these functions, we would expect as a minimum to be satisfied that the
operational arrangements ensured sufficient independence from those performing
executive functions at Remuneration Code firm or group level, and allowed the
governing body of the firm to exercise sufficient authority in relation to the
Remuneration Code firm.
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