FG23/5: General Guidance on Proportionality: The Dual-regulated firms Remuneration Code (SYSC 19D) [pdf]

The Financial Conduct Authority, FCA, has published a revised general guidance on Proportionality: The Dual-regulated firms Remuneration Code (SYSC 19D)(FG23/5) for CRR regulated firms, including investment firms, banks, and building societies. The guidance presents an updated version of FG20/4 and provides support as regards the following issues:
– a general overview of the proportionality levels to be used for classification of CRR firms for the purpose of applying proportionality in remuneration (policies);
– the objective of the use of such levels which is to clarify regulatory expectations with each of the three levels;
– the procedure firms shall adopt for classifying their firms accordingly, including the use of the table listed at the bottom of the summary for such classification;
– general guidance as to how the resulting classification should be „treated“ for purposes of the remuneration requirements set out in section 19D of the Senior Management Arrangements, Systems and Controls Sourcebook; and
– the treatment of staff that has not been employed for a period of 12 months.
The new version reflects the revised criteria to be classified as a smaller firm for purposes of applying less stringent rules on the remuneration requirements of such firms as announced in the joint Policy Statement (FCA PS23/17 – PRA PS16/23) (EventID 24252). It also includes detailed instructions on how these criteria are to be applied. Finally, it contains minor technical changes throughout to improve clarity and usefulness.
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Table 1: Classification criteria for proportionality levels