The Remuneration Code – the policy is now clear

Few will be unaware that the Remuneration Code, originating from G20, codified by the European Commission and enacted by the FSA, is about to strike. The European directive – CRD3 – set the date at 1 January 2011 and all of us in Europe must scramble to comply with that unreasonable timeframe. Now that FSA has published its policy statement we know where we stand. Well, more or less.

Setting aside for the moment the big picture questions of whether the Code achieves its aim of risk limitation and the reduction of the probability of a further banking crisis, the industry needs to consider its position, as it is now revealed to us. Remembering that FSA has anything but a free hand, the Regulator’s use of the proportionality provisions to mitigate the impact on the fund management industry is most welcome. The greatest impositions in the directive have been disapplied to those who do not regularly commit their balance sheets to risk. They will not be compelled to apply deferral measures to bonus payments and they will not have to pay those bonuses substantially in shares. The sigh of relief is audible; a significant threat to the competitiveness of the industry is lifted, for the time being at least.

Time is of essence