On 8 October 2018, the Financial Stability Board (FSB) hosted a workshop in London with 17 large internationally active banks to discuss their experiences of implementing the FSB’s Principles for Sound Compensation Practices and the related Implementation Standards. The FSB has now published a short note which summarises the issues discussed at the workshop and the key takeaways.
The workshop focussed on:
- Big picture - a review of how compensation structures have changed since the crisis and thoughts on further changes in the coming years.
- Implementation of the FSB’s Principles and Standards by banks - practical steps taken by international banks to implement compensation reform, including the designation of material risk takers.
- Effectiveness - steps banks are taking to assess the effectiveness of current compensation policies and practices in terms of better aligning risk and reward.
The FSB uses these workshops to gather feedback which will inform their biennial progress report on compensation practices. This process forms part of the FSB’s consideration of the alignment of risk and reward within banks and provides a greater understanding of how international banks have implemented, and look to implement, the FSB’s Principles and Standards (and any related legislation) to align risk and reward. The short note provides some useful insights and we recommend that firms read it.
The FSB have asked for any feedback to be sent to them by Tuesday 7 May 2019 to email@example.com.
Tapestry has significant experience advising financial services firms on their remuneration compliance, particularly in relation to remuneration regulations. If you would like to discuss your remuneration compliance with us, please do contact us.