17. Remuneration policies

Competent authorities should apply a risk-based approach when supervising the remuneration policies and practices of investment firms and review them in line with the EBA guidelines on the supervisory review process.

Competent authorities should ensure within their supervisory review, taking into account these guidelines, that investment firms comply with the requirements on remuneration policies set out in Directive (EU) 2019/2034 and the provisions of the RTS on identified staff, including that they have appropriate gender neutral remuneration policies for all staff and for identified staff.

Competent authorities should ensure that investment firms align their remuneration policy and practices to the business strategy and the long-term interest of the investment firm taking into account its business and risk strategy, corporate culture and values, and risk profile.

Competent authorities should ensure that investment firms’ remuneration policies, practices and processes are appropriate, including the award of guaranteed variable remuneration, severance payments and discretionary pension benefits.

Competent authorities should ensure that investment firms have set an appropriate maximum ratio between the variable and the fixed part of total remuneration.

Competent authorities should review the gender pay gap within investment firms and follow up on any indication that remuneration policies are not gender neutral.

Competent authorities should be satisfied with the overall outcome of the identification process and should assess if all staff members whose activities have or may have a material impact on the investment firm’s risk-profile or of the assets that it manages have been identified and that any exclusions of staff from the category of identified staff, where staff were only identified by the quantitative criteria in the RTS are well-reasoned and that the respective processes set out in these guidelines and the RTS have been complied with.

Without prejudice to other supervisory and disciplinary measures and sanctions, competent authorities should require investment firms to take adequate actions in order to remedy any identified deficiencies. Where investment firms do not comply with such request, appropriate supervisory measures should be taken.