RTTNews - Wednesday, UK's Financial Services Authority unveiled a new remuneration code that demand large banks, building societies and broker dealers to follow remuneration policies consistent with effective risk management.
The new code tries to ensure that the boards focus closely to see that firms distribute total amount consistent with the good risk management and sustainability. It also intend to ensure that individual compensation practices provide the right incentives. The code makes it clear that firms are not expected to enter into contracts with individuals which provide guaranteed bonuses for more than one year, the FSA said.
Firms are expected to give the FSA with a remuneration policy statement by the end of October. This will have to be signed off by remuneration committees and will assist the FSA in checking its compliance.
Hector Sants, FSA chief executive said, The FSA is determined that banks' remuneration policies should be consistent with, and promote, effective risk management. The new rules and code of practice, which will take effect from January, next year, are aimed at achieving this.
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