On 14 April 2021, the PRA and FCA issued a joint statement regarding the Financial Stability Board’s (FSB) peer review report on the United Kingdom.

Key points in the statement include:

  • The UK is the first FSB member to be assessed by peers on the effectiveness of its remuneration reforms in the financial sector since the 2008 global financial crisis and its consistency with the FSB’s Principles for Sound Compensation Practices (the Principles).
  • The PRA and FCA welcome the findings of the report which highlights that the UK approach is consistent with the Principles.
  • The UK authorities welcome the recommendations made in the report that included: (i) reviewing the interaction between the UK’s remuneration regimes and the Senior Managers and Certification Regime (ii) improving the efficiency of data collection (iii) considering other supervisory approaches for assessing the effectiveness of the regime (iv) providing additional guidance to the insurance sector.

The peer review took place prior to the UK’s implementation of the fifth Capital Requirements Directive which came into force on 29 December 2020. The report does not examine these changes in depth. The FCA also plans to consult on a new remuneration regime for investment firms shortly as part of the new Investment Firms Prudential Regime.