The FSA says it will not extend its remuneration code for banks to practitioners in other sectors, such as independent financial advisers.
It says it wants to ensure firms that are within its scope, including building societies and broker dealers, are fully compliant by the time the new rules come in on 1 January.
Following public outcry over bankers' pay, the FSA introduced 10-point guidelines into its Handbook requiring firms to have "remuneration policies, procedures and practices that are consistent with and promote effective risk management". It later consulted on whether to extend the code to other FSA-authorised firms.
But today it announced it has decided "not to introduce any new rules and will not extend the rules to other sectors".
The Association of IFAs (AIFA), one of the respondents to the consultation, pointed out its members have a "completely different business model to that of banks", and that "to impose unnecessary rules on all to prevent bad practice in a few is neither good regulation nor cost effective'.
The FSA adds other respondents thought firms who have "not contributed to the crisis, and for whom no evidence of poor remuneration practices exist", should not be subject to a code designed with banks in mind.
It says it has committed to a review of the effectiveness of the remuneration code in mid 2010. At that stage, it says it will also take into account:
- The wider European work that touches on remuneration: a number of directives containing remuneration provisions are currently at different stages of European negotiation;
- The elements of the Walker Review that focused on remuneration; and
- The progress of the Financial Services Bill which may give new powers to the FSA in respect of remuneration.
Feedback to the FSA's consultation on extending the remuneration code can be found here.
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