The FSA is considering extending its code of remuneration practices to retail investment advisers despite admitting that adviser remuneration did not play a significant role in the credit crisis.
In its consultation paper,entitled, Reforming Remuneration Practices in Financial Services, which was published last week, the FSA proposed new handbook rules for the UK’s 45 biggest banks, brokers and building societies.
Under the rules, firms will have to defer at least two-thirds of all significant bonuses so that payouts are linked to the long-term performance of entire banks or divisions.
The regulator says its overall objective is for firms to “establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote effective risk management”.
The regulator is considering extending this requirement to other FSA-authorised firms, including retail investment intermediaries.