The FSA is encouraging all FSA-authorised firms to review their remuneration policies having regard to the principles underpinning its code of practice on remuneration published on 18 March 2009 (the “Code”). The FSA notes that:
• The basic principles behind the Code – good governance in making remuneration policy and implementing it effectively, sound practices in the measurement of performance for determining bonuses, and ensuring that remuneration structures do not encourage an excessively short term approach or excessive risk taking – are good practice for all firms, whatever their size or the nature of their business;
• The general requirement that a firm must establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote effective risk management is “self evidently a high-level requirement which should be followed by all firms”; and
• It will, as soon as possible, be taking steps to increase its focus within its supervisory programmes on the potential risks posed by inappropriate remuneration practices in all FSA-authorised firms.
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