The remuneration code requirements will cover matters such as ratios for fixed and variable pay (no hard numerical cap is contemplated), remuneration governance and policies, remuneration committee oversight, disclosure and regulatory reporting. Whilst many of the remuneration rules’ concepts, requirements and principles will be familiar to investment firms, the biggest impact is likely to be felt by (a) adviser-arranger firms, which are not currently subject to the rules in the existing remuneration codes, and (b) those firms that are currently able to disapply the more onerous structural requirements.
Although the IFR/IFD will apply from 26 June 2021, the new remuneration rules will likely apply to the remuneration payments for the year commencing January 2022.
The application of the rules depends on how the investment firm is classified under the IFR/IFD.
Class 1 firms
These firms include certain proprietary trading firms, securities underwriters and placing agents. They will continue to be subject to the remuneration requirements in the CRR/CRD.