Following the FCA Consultation Paper 17/7 (click here to see out review), the Financial Conduct Authority (FCA) has issued “near final” rules in Policy Statement 17/21. Broadly, the FCA has confirmed that it will implement the remuneration rules proposed in CP17/7 from 23 February 2018, including extending Systems and Controls (SYSC) 19F to cover IDD firms. This will mean that firms subject to the IDD will be covered by conduct rules in respect of remuneration which broadly mirror those that apply to MiFID firms. The FCA also notes that it is considering issuing additional guidance on the IDD remuneration provisions.
The FCA has also released its third consultation on the IDD rules in CP 17/33, the remuneration aspects of which mostly relate to the “by way of business” tests rather than the operation of remuneration policies and practices.
We recommend that IDD firms review remuneration policies and practices to check they are aligned with the revised SYSC and Insurance Conduct of Business Sourcebook (ICOBS) rules for the 2018 Performance Year. We have recently been working on similar exercises with MiFID firms in respect of the requirements of SYSC 19F and would be very happy to discuss how we can help legal/compensation and benefits teams get comfortable that arrangements going forward will be compliant with the IDD.
To discuss the implications of these rules for (among other things) performance assessment processes, deferral policies, remuneration policy statements and disclosures please call Ian Fraser or Tair Hussain.
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