FCA writes to RemCo chairs

FCA has written to the Chairs of Remuneration Committees within firms to set out its approach to remuneration this year and to highlight the areas RemCo chairs should be considering.

Broadly, the Chair must remain satisfied that the firm’s remuneration policies are aligned with its purpose, business strategy and values, and incentivise the right behaviours.  FCA notes the SMCR is a key tool to ensure high standards of conduct and culture and says it is important to made ex-post risk adjustments in an appropriate and timely manner for instances of poor behaviour or misconduct.

The Chair has a crucial role in ensuring the firm’s policy supports and connects remuneration outcomes to the firm’s strategic priorities, purpose and values – and expects to see more firms using non-financial measures in scorecards to support ESG factors. FCA also urges firms to keep up their good work on diversity and review pay data against all protected characteristics.

In line with PRA, FCA asks firms to submit their Remuneration Policy Statement Annex 1 by 30 September where their financial year end if 31 December, along with any changes to policies and an explanation of how the firm has assured itself that its overall remuneration policies support its purpose, business strategy and values and incentivise the right behaviours, and how the firm’s approach to variable remuneration will be considered in the continuing context of the pandemic.

Emma Radmore