SYSC 19A.1 General application and purpose

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's UK activities; and8

   2. (b)

      [deleted]8

   3. (c)

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

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.

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 EBA “Guidelines on sound remuneration policies under Articles 74(3) and 75(2) of Directive 2013/36/EU and disclosures under Article 450 of Regulation (EU) No 575/2013”, 21 December 2015 (EBA/GL/2015/22).8

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3. (3)

   [deleted]9

   9

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 firms remuneration 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.

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.