UK financial services remuneration reform: what solo-regulated firms need to know

In CP26/27, the FCA proposes simplifying the remuneration framework for UK solo-regulated firms by replacing the existing AIFM, UCITS and MIFIDPRU remuneration codes with a single, more proportionate regime. The proposals are designed to reduce complexity and compliance costs, while giving firms greater flexibility to tailor pay arrangements to their business model and risk profile. 

What’s changing?

The proposals would relax several prescriptive features of the current regime, including aspects of deferral, malus and clawback, governance and reporting. The quid pro quo for greater flexibility is a continued need for careful governance, clear decision-making and a robust paper trail.

How can firms get ahead?

Although the rules are still at the consultation stage (until 16 September), firms can start preparing now by focusing on several practical action areas:

• Scope, remuneration and staff mapping: assess which entities, arrangements, staff and material risk takers (MRTs) would remain in scope under the proposed new Code.
• Pay design: consider how greater flexibility on deferral, guarantees, malus, clawback and other risk adjustment tools could be used in practice.
• Governance and evidence: review decision-making, approvals and record-keeping so choices can be justified to the FCA and other stakeholders.
• Transition planning: identify where existing and new rules may need to run side by side for legacy awards.
• Cross-border planning: assess how UK flexibilities would apply where MRTs are subject to stricter EU remuneration requirements.

Click here for our briefing with more detailed commentary on the proposals and their potential impact, as well as practical action areas for firms: A single remuneration code for UK FCA solo-regulated firms: unpacking CP26/27

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