Pay in the Financial Services Sector – Latest Developments

Pay in the Financial Services Sector – Latest Developments


Avid readers of Have I Got Employment News For You will know that we have been tracking the developing regulations on City pay over recent months. The latest news is:

  • The UK government has challenged the EU bonus cap that will limit bonuses within the banking sector to 100% of salary (or 200% with special shareholder approval). It will be a couple of years until a decision is reached so the challenge will not delay the introduction of the cap next year.
  • Consultation on the PRA and FCA consultation papers on CRD IV (which includes the remuneration rules and bonus cap for the banks and larger financial institutions) closes in early November 2013 and the final rules will be published in December 2013. The rules will apply form 1 January 2014.
  • Firms that are covered by CRD IV but fall within Level 3 will not generally have to apply the bonus cap.
  • A much wider definition of Code Staff may be introduced, possibly to catch any employee earning total compensation in excess of €500m. The consultation ended on 21 August 2013, but there was a significant amount of negative feedback which may result in any changes being pushed back to late 2014.
  • The FCA consultation on its AIFMD pay rules (which will impact fund/asset managers, hedge funds and private equity firms) will end on 6 November. Final FCA guidance is expected in January 2014 and compliant pay provisions need to be in place by 22 July 2014 at the latest.