5. The identification process

It is the responsibility of investment firms to identify the members of staff whose professional activities have a material impact on the risk profile of the investment firm or the assets it manages (identified staff). All investment firms should conduct annually a self-assessment in order to identify all staff whose professional activities have or may have a material impact on the risk profile of the investment firm or the assets it manages. The identification process should be part of the overall remuneration policy of the investment firm.

The self-assessment should be based on the qualitative and quantitative criteria set out in the RTS on identified staff and, where needed, to ensure the complete identification of all staff whose professional activities have a material impact on the risk profile of the investment firm or the assets it manages, additional criteria set forth by the investment firm that reflect the levels of risk of different activities within the investment firm and the impact of staff members on the risk profile.

When applying quantitative criteria based on staff members’ remuneration, the fixed remuneration awarded for the preceding financial year and the variable remuneration awarded to staff in or for the preceding financial year should be taken into account. The variable remuneration awarded in the preceding financial year is the variable remuneration awarded in the preceding financial year with reference to previous performance. Investment firms should define the applicable method in their remuneration policy. When applying quantitative criteria based on staff’s remuneration, investment firms should take into account all monetary and non-monetary fixed and variable remuneration components awarded for professional services. Routine remuneration packages that are not accounted for on an individual level should be taken into account based on the overall sum broken down by objective criteria to the individual staff member.

When applying quantitative criteria defined in EUR, investment firms which award remuneration in a currency other than the euro should convert the applicable thresholds using either the internal exchange rate used for the consolidation of the accounts or the exchange rate used by the Commission for financial programming and the budget for the month where the remuneration was awarded or the exchange rate for the last month of the investment firm’s financial year . The investment firm should document the applicable method to determine the exchange rate in their remuneration policy.

The self-assessment should be clear, consistent, properly documented and periodically updated during the year at least with regard to qualitative criteria within the RTS on identified staff and, where appropriate, in addition based on investment firms’ criteria. Investment firms should ensure that staff who fall or are likely to fall under the criteria in Article 3 of the RTS on identified staff for a period of at least three months in a financial year are treated as identified staff.

The following information should at least be included in the documentation of the self-assessment done regarding the identification of staff:

• a. the rationale underlying the self-assessment and the scope of its application;
• b. the approach used to assess the risks emerging from the investment firm’s business strategy and activities, including in different geographical locations;
• c. how persons working in investment firms and other entities within the scope of consolidation, subsidiaries and branches, including such located in third countries, are assessed;
• d. the role and responsibilities of the different corporate bodies and internal functions involved in the design, oversight, review and application of the self-assessment process; and
• e. the identification outcome.

Investment firms should keep records of the identification process and its results and should be able to demonstrate to their competent supervisory authority how staff have been identified according to both the qualitative and quantitative criteria provided for within the RTS on identified staff and any additional criteria used by the investment firms.

The documentation of the self-assessment should at least include the number of identified staff, including the number of staff identified for the first time, the job responsibilities and activities, the names or another unique identifier and the allocation within the investment firm of the identified staff to business areas and a comparison with the results of the previous year’s self-assessment.

The documentation should also include staff members who have been identified under quantitative criteria, but whose professional activities are assessed as not having a material impact on the risk profile of the investment firm or the assets it manages, in accordance with RTS on identified staff. Investment firms should maintain the documentation for an appropriate time period to enable the review by the competent authorities.