Proposals reflect drive to enhance the competitiveness of the UK regulatory landscape.
By Rob Moulton, Kendall Burnett, Sarah Gadd, Charlie Bowden, and Charlotte Collins
On 26 November 2024, the PRA and the FCA published a joint Consultation Paper on changes to the remuneration rules (PRA CP16/24, FCA CP24/24). The changes are relevant to banks, building societies, and PRA-designated investment firms.
While the amendments to the rules on deferrals and retention had been previewed by both the
PRA and FCA speeches recap the regulators’ work to deliver growth and enhance competitiveness, and outline some key upcoming policy work.
By Rob Moulton, Nicola Higgs, Becky Critchley, and Charlotte Collins
On 17 October 2024, the PRA and the FCA both published speeches given by their Chief Executives at the Annual City Banquet. Although the speeches cover different topics on the regulators’ policymaking agendas, both focus on how the regulators will further their new secondary objective to
The proposal seeks to make executive compensation arrangements more sensitive to risk and would require complex risk management programs to ensure compliance.
By Arthur S. Long, Pia Naib, and Deric Behar
On May 6, 2024, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the Federal Housing Finance Agency (FHFA), and the National Credit Union Administration (NCUA) (collectively, the agencies) issued a joint Notice of Proposed Rulemaking (the Proposed Rule) to curb “excessive risk-taking” resulting from incentive-based compensation arrangements. The Board of Governors of the Federal Reserve System (FRB) and the Securities and Exchange Commission (SEC) did not join in the Proposed Rule.[1],[2] Critically, without the FRB’s participation, the Proposed Rule may not be finalized.
The Proposed Rule seeks to curtail incentives for certain financial services sector officers, employees, and directors to take inappropriate risks as a result of seeking excessive compensation, fees, or benefits. It uses a tiered approach based on asset size categories, where covered institutions (defined below) within the two largest asset size categories would be subject to prescriptive requirements related to the structure of their incentive-based compensation arrangements, including incentive award limits, deferral requirements, downward adjustments, forfeitures, and clawbacks.
The Proposed Rule re-proposes the regulatory text previously proposed in June 2016 (with a new preamble that acknowledges developments and supervisory learnings) and seeks additional feedback from commenters on potential alternatives to various provisions.
The discussion paper aims to encourage industry-wide dialogue on sustainability related-governance, incentives, and competence.
By Anne Mainwaring, Sara Sayma, and Dianne Bell
On 10 February 2023, the FCA published DP23/1: Finance for positive sustainable change: governance, incentives and competence in regulated firms.
The FCA considers that a firm’s governance, purpose, and culture are central to how it embeds environmental and social considerations into business, risk, and capital allocation decisions for the benefit of consumers. With this in mind, the FCA is seeking views on how it can move effectively beyond disclosure-based initiatives to help and encourage firms as they develop their arrangements for governance, incentives, and competence in the area of sustainability.