17.2 Independence of internal control functions

In order for the internal control functions to be regarded as operating independently, the following conditions should be met:

• a. their staff do not perform any operational tasks that fall within the scope of the activities the internal control functions are intended to monitor and control unless it is demonstrated that, in view of the criteria listed in Title I for the application of the proportionality principle, the internal control functions continue to be effective. In that case, investment firms should assess whether the effectiveness of their internal control functions is compromised.
• b. Where appropriate, they are organisationally separate from the activities they are assigned to monitor and control;
• c. the remuneration of the internal control functions staff should not be linked to the performance of the activities the internal control function monitors and controls, and should not otherwise be likely to compromise the staff members’ objectivity³⁴ .

³⁴ See also the EBA guidelines on sound remuneration policies, available at https://www.eba.europa.eu/regulation-and-policy/remuneration/guidelines-on-sound-remuneration-policies.