Overview

The FSA’s Remuneration Code will be extended in scope from 1 January 2011 and will apply to over 2,500 FSA authorised firms. The FSA published a consultation paper on the changes to the Code in July which raises a number of issues for those in the industry and leave a number of important questions unanswered, which firms may wish to address as part of the consultation process.

Considerable concern has been expressed in the industry as to how provisions which are designed to deal with a perceived mischief in investment banks can be applied to other types of financial institution which will be caught by the revised Code. The asset management sector in particular, which operates a very different business model to that operated by the investment banks, have indicated that they foresee difficulties with some aspects of the Code.

The good news for the asset management industry, though, is that the FSA recognises the distinction between investment banks who trade on a proprietary basis and asset managers, the failure of whom poses less potential for systemic disruption. There is still little time, though, to prepare for the introduction of the revised Code and to respond to the consultation – Eversheds outlines how.