The Investment Management Association has briefed senior fund management staff on how to avoid the FSA’s pay clampdown.
An IMA circular, seen by Money Marketing, says investment managers will be able to “neutralise” the most severe pay rules in the FSA’s remuneration code, which comes into effect on January 1, 2011.
In the circular, IMA prudential regulation adviser Nathan Douglas says an exemption was confirmed in the Committee of European Banking Supervisors’ final remuneration guidelines which were published last week.
He says: “These guidelines have confirmed the ability for investment managers not to have to comply with the requirements relating to variable remuneration in instruments, retention and deferral of payments, the need for a remuneration committee and the requirement to set an appropriate ratio between fixed and variable remuneration.”
The CEBS guidelines confirmed that the EU expects to see national regulators employ a “proportionality principle” so some firms can exempt themselves.
The guidelines say: “In particular, it may not be proportionate for investment firms…to comply with all of the principles.”
The IMA adds that any firms that do want to neutralise the clampdown will have to provide a rationale to the FSA.