24/09/2010 Author: Tony Griffiths

BREAKING NEWS: FSA resists rigid approach to remuneration

The UK’s financial regulator is not proposing a “rigid” approach to the EU’s new remuneration code and will allow certain cases to pass on a “comply or explain basis”, FSA asset management chief Dan Waters revealed in a speech yesterday. 

Speaking at the Aima annual conference, Waters said that the deferral provisions for manager pay under Capital Requirement Directive 3 (CRD3) – a redrafting of the EU’s original CRD which has seen the code extended to asset managers as well as bankers – would be applied in a flexible manner to UK participants. 

The CRD proposes a hard requirement to defer at least 40% of variable remuneration over at least a three year period – one of a number of requirements contested by the hedge fund industry. 

“We are concerned that in the case of asset managers, such a hard-edged requirement does not reflect the specificities of different types of funds,” Waters said. 

“It is for this reason that we do not propose a rigid approach to those elements of the CRD remuneration principles that are relevant in the design of remuneration structures for asset managers.  Instead we have proposed that some elements of the code remuneration are applied proportionately and in some cases on a ‘comply or explain’ basis.” 

Also added to the AIFM Directive, remuneration requirements have become one of the industry’s most controversial regulatory topics. 

The FSA is running a consultation process on CRD3 until 8 October.