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SYSC 19A.1 General application and purpose

Who? What? Where?

SYSC 19A.1.1 R
  1. (1)

    1The Remuneration Code applies to:3

    3
    1. (a)

      [deleted]6

      3
    2. (b)

      [deleted]6

      3
    3. (c)

      an IFPRU investment firm;6 and7

      3
    4. (d)

      3an overseas firm that:

      1. (i)

        3is not an EEA firm;

      2. (ii)

        3has its head office outside the EEA; and

      3. (iii)

        3would be an IFPRU investment firm7 if it had been a UK domestic firm, had carried on all its business in the UK and had obtained whatever authorisations for doing so as are required under the Act.

  2. (2)

    In relation to a 3firm that falls under (1)(d), the Remuneration Code applies only in relation to activities carried on from an establishment in the United Kingdom.

    3
  3. (3)

    Otherwise, the Remuneration Code applies to a firm within (1) in the same way as SYSC 4.1.1 R (General Requirements).

SYSC 19A.1.2 G

Part 2 of SYSC 1 Annex 1 provides for the application of SYSC 4.1.1 R (General Requirements). In particular, and subject to the provisions on group risk systems and controls requirements in SYSC 12, this means that:

  1. (1)

    in relation to what the Remuneration Code applies to, it:

    1. (a)

      applies in relation to regulated activities, activities that constitute dealing in investments as principal (disregarding the exclusion in article 15 of the Regulated Activities Order (Absence of holding out etc)), ancillary activities and (in relation to MiFID business) ancillary services;

    2. (b)

      applies with respect to the carrying on of unregulated activities in a prudential context; and

    3. (c)

      takes into account activities of other group members; and

  2. (2)

    in relation to where the Remuneration Code applies, it applies in relation to:

    1. (a)

      a firm'sUK activities;

    2. (b)

      a firm'spassported activities carried on from a branch in another EEA State; and

    3. (c)

      a UK domestic firm's activities wherever they are carried on, in a prudential context.

When?

SYSC 19A.1.3 R
3
  1. (1)

    A firm must apply the remuneration requirements in SYSC 19A.3 other than SYSC 19A.3.44 R (3) and SYSC 19A.3.44A R in relation to:

    1. (a)

      remuneration awarded, whether pursuant to a contract or otherwise, on or after 1 January 2011;3

    2. (b)

      remuneration due on the basis of contracts concluded before 1 January 2011 which is awarded or paid on or after 1 January 2011; and3

    3. (c)

      remuneration awarded, but not yet paid, before 1 January 2011, for services provided in 2010.3

    [Note: article 3(2) of the Third Capital Requirements Directive (Directive 2010/76/EU)]

  2. (2)

    3A firm must apply the remuneration requirements in SYSC 19A.3.44 R (3) and SYSC 19A.3.44A R in relation to remuneration awarded for services provided or performance from the year 2014 onwards, whether due on the basis of contracts concluded before, on or after 31 December 2013.

    3[Note: article 162(3) of CRD]

    3
SYSC 19A.1.4 G

Subject to the requirements of SYSC 19A.1.5 R, in the FCA’s7 view SYSC 19A.1.3 R does not require a firm to breach requirements of applicable contract or employment law.

[Note: recital 697 of the CRD7]

SYSC 19A.1.5 R
  1. (1)

    This rule applies to a firm that is unable to comply with the Remuneration Code because of an obligation it owes to a Remuneration Code staffmember under a provision of an agreement made on or before 29 July 2010 (the "provision").

  2. (2)

    A firm must take reasonable steps to amend or terminate the provision referred to in (1) in a way that enables it to comply with the Remuneration Code at the earliest opportunity.

  3. (3)

    Until the provision referred to in (1) ceases to prevent the firm from complying with the Remuneration Code, the firm must adopt specific and effective arrangements, processes and mechanisms to manage the risks raised by the provision.

Purpose

SYSC 19A.1.6 G
  1. (1)

    The aim of the Remuneration Code is to ensure that firms have risk-focused remuneration policies, which are consistent with and promote effective risk management and do not expose them to excessive risk. It expands upon the general organisational requirements in SYSC 4.

  2. (2)

    The Remuneration Code implements the main provisions of the 3CRD which relate to remuneration. 7In applying the Remuneration Code, firms should comply with the Guidelines published by the EBA on 21 December 2015 on sound remuneration policies under articles 74(3) and 75(2) of the CRD and on disclosures under article 450 of the EU CRR. The Guidelines can be found at: http://www.eba.europa.eu/documents/10180/1314839/EBA-GL-2015-22+Guidelines+on+Sound+Remuneration+Policies.pdf/1b0f3f99-f913-461a-b3e9-fa0064b1946b.7

    32355555552
  3. (3)

    [deleted]8

    8

Notifications to the FCA

SYSC 19A.1.7 G
  1. (1)

    7In addition to the notification requirements in the Remuneration Code7 general circumstances in which the FCA7 expects to be notified by firms of matters relating to their compliance with requirements under the regulatory system are set out in SUP 15.3 (General notification requirements).

  2. (2)

    In particular, in relation to remuneration matters such circumstances should take into account unregulated activities as well as regulated activities and the activities of other members of a group and would include each of the following:

    1. (a)

      significant breaches of the Remuneration Code, including any breach of a rule to which the detailed provisions on voiding and recovery in SYSC 19A Annex 1 apply;

    2. (b)

      any proposed remuneration policies, procedures or practices which could:

      1. (i)

        have a significant adverse impact on the firms reputation; or

      2. (ii)

        affect the firms ability to continue to provide adequate services to its customers and which could result in serious detriment to a customer of the firm; or

      3. (iii)

        result in serious financial consequences to the financial system or to other firms;

    3. (c)

      any proposed changes to remuneration policies, practices or procedures which could have a significant impact on the firms risk profile or resources;

    4. (d)

      fraud, errors and other irregularities described in SUP 15.3.17 R which may suggest weaknesses in, or be motivated by, the firmsremuneration policies, procedures or practices.

  3. (3)

    Such notifications should be made immediately the firm becomes aware, or has information which reasonably suggests such circumstances have occurred, may have occurred or may occur in the foreseeable future.

Individual guidance

SYSC 19A.1.8 G

The FCA's policy on individual guidance is set out in SUP 9. Firms should in particular note the policy on what the FCA considers to be a reasonable request for guidance (see SUP 9.2.5 G). For example, where a firm is seeking guidance on a proposed remuneration structure the FCA will expect the firm to provide a detailed analysis of how the structure complies with the Remuneration Code, including the general requirement for remuneration policies, procedures and practices to be consistent with and promote sound and effective risk management.