FCA has written a “Dear Chair” letter to the chairs of Remuneration Committees of proportionality level one dual regulated firms. The letter:
- stresses that in times of continuing cost of living pressures, their role is key in ensuring that their firm’s remuneration practices and policies incentivise an approach that ensures good outcomes for consumers across all products and services;
- notes that FCA has been writing regularly to the group, but does not plan to write again for at least 2 years, so is reminding Chairs of key areas they should be considering;
- reminds of the removal of the bonus cap which is intended to make the remuneration regime more effective and give firms more flexibility to absorb losses in an economic downturn or to respond to material poor performance or misconduct that comes to light;
- highlights that the Consumer Duty means that as firms continue to use technology to transform their businesses, they must put consumers first and never forget the potential needs of vulnerable customers;
- reiterates FCA’s expectation that firms encourage healthy cultures, which make roles and responsibilities clear, encourage staff to speak up and have strong systems for assessing fitness and propriety of staff;
- directs firms to the PRA/FCA consultation on D&I, welcomes engagement and reminds firms of the need to have gender neutral pay policies; and
- says firms who have committed to sustainability-related objectives must have the relevant strategies and skills to meet their commitments.