FCA has written its annual letter to RemCo chairs of Level 1 firms. The letter sets out what FCA has found on accountability, ex-post risk adjustments and diversity and inclusion. The letter:
- notes the responsibilities of the SMF12 function holder, stressing its expectation the role include considering how the firm’s remuneration policies and procedures will contribute to a healthy culture;
- sees that firms are adjusting rewards to reflect poor performance and misconduct but says some struggle to justify their adjustments;
- says firms still need to make improvements in diversity and inclusion, looking at the concept broadly and taking into account issues like ethnicity, disability, social mobility and diversity of thought;
- asks firms to submit not only their annual remuneration policy statement but also a short summary of it, including any changes over the year, and an explanation of how the firm has concluded its overall remuneration policies drive behaviour that reduces potential harm.
FCA also explains it is looking at the non-financial drivers of incentives and what really motivates individuals working in financial services. It welcomes views on this.