FSA Guidance on Proportionality in Relation to its Remuneration Code

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On September 25 the FSA published Finalised Guidance 12/19: General guidance on Proportionality: The Remuneration Code (SYSC 19A) & Pillar 3 disclosures on remuneration (BIPRU 11) (FG12/19).

The Remuneration Code (the “Code”) regulates the way in which financial services firms remunerate their staff. Firms are required to apply the Code in a way that is proportionate to their size, internal organisation and the nature, scope and complexity of their activities. The FSA provides guidance which sets out a framework of what it considers to be a proportionate application of the Code to different sized firms. Prior to the publication of FG 12/19, the FSA’s guidance placed each firm into one of four proportionality tiers, determined by its capital resources.

FG 12/19 replaces the old four-tiered proportionality structure with a new framework. In the new framework each firm will be placed into one of three proportionality levels, determined by its total assets.