The Court of Justice of the European Union (ECJ) has issued a press release setting out the Advocate General’s opinion in Case C-507/13, United Kingdom v Parliament and Council.
It is in this case that the UK Government asked the ECJ to annul certain provisions in the CRD IV legislative package concerning the ratio between fixed remuneration and variable remuneration for individuals whose professional activities impact on the risk profile of their financial institutions.
In his opinion Advocate General Jääskinen suggests that all of the UK Government’s pleas to annul the provisions should be rejected and that the ECJ should dismiss the action. The Advocate General’s opinion is not binding on the ECJ.
HM Treasury has published a letter from the Chancellor, George Osborne MP to Mark Carney, the chair of the Financial Stability Board (FSB). In his letter the Chancellor states that it “now looks clear that there are minimal prospects for success with our legal challenge, so we will no longer pursue it.” The Chancellor also states that as part of the FSB’s ongoing work to monitor and report on the implementation of the Principles for Sound Compensation there is a need for careful consideration as to how, in jurisdictions such as the EU where the balance of banking remuneration has shifted towards fixed remuneration, compensation schemes can still achieve the objective of supporting sound risk taking. The Chancellor will also ask the Fair and Effective Markets Review to consider this issue as part of its work on responsibilities, governance and incentives.
View Advocate General Jääskinen considers that the EU legislation limiting the ratio of bankers bonuses compared to their basic salary is valid, 20 November 2014
View Bank remuneration: letter from the Chancellor to the Governor of the Bank of England, 20 November 2014