SYSC 19C.1 General application and purpose

1The AIFM Remuneration Code (SYSC 19B) also applies to a BIPRU firm which is a full-scope UK AIFM (ie, a full-scope UK AIFM that is an AIFM investment firm subject to BIPRU). Such a full-scope UK AIFM that complies with SYSC 19B will also comply with SYSC 19C. In such cases, the FCA will not require the full-scope UK AIFM to demonstrate compliance with SYSC 19C.

1. (1)

   2The UCITS Remuneration Code (SYSC 19E) also applies to a BIPRU firm that is a UK UCITS management company (that is, a UK UCITS management company that is a UCITS investment firm subject to BIPRU).

2. (2)

   A BIPRU firm that is a UK UCITS management company will meet its obligations under SYSC 19C and SYSC 19E by complying with SYSC 19E.

3. (3)

   Under (1) and (2), the FCA will not require the UK UCITS management company to demonstrate compliance with SYSC 19C.

Part 2 of SYSC 1 Annex 1 provides for the application of SYSC 4.1.1 R and SYSC 4.1.1C 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)

   the BIPRU Remuneration Code:

   1. (a)

      applies to regulated activities, ancillary activities and applicable ancillary services;

   2. (b)

      applies 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)

   where the BIPRU Remuneration Code applies, it applies to:

   1. (a)

      a firm's UK activities;

   2. (b)

      a firm's passported 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.

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

The aim of the BIPRU 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.

1. (1)

   The BIPRU Remuneration Code does not contain specific notification requirements. However, general circumstances in which the FCA 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 BIPRU Remuneration Code;

   2. (b)

      any proposed remuneration policies, procedures or practices which could:

      1. (i)

         have a significant adverse impact on the firm's reputation; or

      2. (ii)

         affect the firm's 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; and

   4. (d)

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

3. (3)

   Such notifications should be made immediately the firm becomes aware of those circumstances, or has information which reasonably suggests that those circumstances have, or 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 particularly 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 BIPRU Remuneration Code, including the general requirement for remuneration policies, procedures and practices to be consistent with and promote sound and effective risk management.