Emma RadmorePRA and FCA have confirmed the decision to remove the limits on the ratio between fixed and variable remuneration with effect from the end of October 2023 and which will apply to current and future performance years. They say they are doing so to increase the effectiveness of the remuneration regime by increasing the proportion of pay that can be subject to incentives. They also say that the bonus cap rules had some unintended consequences that the changes will help remove, such as restricting a firm’s ability to adjust variable remuneration levels because of, for instance, material poor performance or misconduct that come to light after the event. The rules apply to banks, building societies and PRA-designated investment firms.
FCA says it will also be reminding Remuneration Committee Chairs of level one firms about its expectations that remuneration policies should align with and support a healthy culture and promote positive outcomes for consumers.