FSA To Strengthen Remuneration Code, Possibly Affecting 2,500 Firms

The UK Financial Services Authority recently published a consultation paper describing how it intends to update its Remuneration Code (the "Code") to (i) implement the remuneration requirements of the Financial Services Act 2010 and (ii) incorporate the remuneration provisions of the latest amendments to the EU Capital Requirements Directive ("CRD3"). The requirement that remuneration policies must be consistent with and promote effective risk management remains the central tenet of the revised Code. Incorporation of CRD3 requirements, which come into force on 1 January 2011, will bring over 2,500 firms within scope of the Code. On 8 October 2010 the Committee of European Banking Supervisors (CEBS), which exists to ensure consistent implementation of EU law, published for consultation draft guidelines on the interpretation of the remuneration provisions of CRD3. FSA is obliged to take the guidance into account in their implementation of CRD3. The guidance will have a