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SYSC 19G.3 Governance and oversight

Oversight of remuneration policies and practices

SYSC 19G.3.1R

1A MIFIDPRU investment firm must ensure that its management body in its supervisory function adopts and periodically reviews the remuneration policy and has overall responsibility for overseeing its implementation.

SYSC 19G.3.2G
  1. (1)

    1Each firm should assess the most appropriate frequency for the periodic reviews referred to in SYSC 19G.3.1R, taking into account all relevant factors.

  2. (2)

    The development and review of the remuneration policy should be supported by the control functions, including (where they exist) risk management, compliance, internal audit and human resources, and by business units.

  3. (3)

    The processes and decision-making around the development, review and amendment of remuneration policies and practices are subject to the general record-keeping requirements set out in SYSC 9.

SYSC 19G.3.3R

1A firm’s remuneration committee, where it has one, must oversee the implementation of the firm’s remuneration policies and practices established under SYSC 19G.2.1R.

SYSC 19G.3.4R

1A non-SNI MIFIDPRU investment firm must, at least annually, conduct a central and independent internal review of whether the implementation of its remuneration policies and practices complies with the remuneration policy and practices adopted by the management body in its supervisory function.

SYSC 19G.3.5G
  1. (1)

    1The FCA would expect the central and independent internal review to assess whether the implementation of the remuneration policies and practices:

    1. (a)

      results in remuneration awards that are in line with the firm’s business strategy;

    2. (b)

      reflects the risk profile, long-term objectives and other relevant goals of the firm; and

    3. (c)

      complies with all relevant legal requirements.

  2. (2)

    A non-SNI MIFIDPRU investment firm may outsource part or all of the independent review in SYSC 19G.3.4R. The management body in its supervisory function remains responsible for ensuring the review is carried out and any necessary follow up actions are taken.

  3. (3)

    A non-SNI MIFIDPRU investment firm should document appropriately the results of the review and the actions taken to remedy any findings.

Control functions

SYSC 19G.3.6R

1A MIFIDPRU investment firm must ensure that staff engaged in control functions:

  1. (1)

    are independent from the business units they oversee;

  2. (2)

    have appropriate authority; and

  3. (3)

    are remunerated in accordance with the achievement of the objectives linked to their functions, independent of the performance of the business areas they control.

SYSC 19G.3.7R

1A MIFIDPRU investment firm must ensure that the remuneration of the senior officers in risk management and compliance functions is directly overseen by the remuneration committee, or, if such a committee has not been established, by the management body in its supervisory function.

SYSC 19G.3.8G

1SYSC 19G.3.6R and SYSC 19G.3.7R are designed to manage the conflicts of interest which may arise if other business areas had undue influence over the remuneration of staff in control functions. Conflicts of interest can easily arise when staff members are involved in the determination of remuneration for their own business area. Where these could arise, they need to be managed by having in place independent control functions (in particular risk management, compliance and human resources functions).