SYSC 19D.1 1Application and purpose

2SYSC 19D.1.1R(2) is applied to the extent of the FCA’s powers and regulatory responsibilities.

Subject to SYSC 19D.1.5R, SYSC 19D.1.3R does not require a firm to breach requirements of applicable contract or employment law.

1. (1)

   The aim of the dual-regulated firms 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 dual-regulated firms Remuneration Code implements the main provisions of the CRD which relate to remuneration. In applying the rules in the dual-regulated firms 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).3

   2

1. (1)

   In addition to the notification requirements in the dual-regulated firms Remuneration Code2, 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)

   For remuneration matters in particular, those 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 dual-regulated firms Remuneration Code, including any breach of a rule to which the provisions on voiding and recovery in SYSC 19D Annex 1 apply;

   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 firm’s risk profile or resources;

   4. (d)

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

3. (3)

   Notifications should be made immediately as the firm becomes aware or has information which reasonably suggests that those 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 particularly note the policy on what the FCA considers to be a reasonable request for guidance (see SUP 9.2.5G). 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 dual-regulated firms Remuneration Code, including the general requirement for remuneration policies, procedures and practices to be consistent with, and promote, sound and effective risk management.

Except as provided in the Glossary, any expression used in, or for the purpose of, this chapter which is defined or used in UK CRR3 has the meaning given by, or used in, those Regulations.