5.4 Remuneration policies and practices

Competent authorities should assess whether the investment firm has remuneration policies and practices that are gender neutral, as specified in Articles 25 to 26 and 30 to 33 of Directive (EU) 2019/2034 and the EBA Guidelines on sound remuneration policies, in particular for categories of staff including senior management, risk takers, staff engaged in control functions and any employees receiving overall remuneration equal to at least the lowest remuneration received by senior management or risk takers, whose professional activities have a material impact on the investment firm’s risk profile or assets under management.

Competent authorities should assess at least whether:

• a. the remuneration policy for all staff is consistent with the investment firm’s business and risk strategies, corporate culture and values, the long-term interests of the investment firm and the measures taken to avoid conflicts of interest, is gender neutral and does not encourage excessive risk taking and is maintained, approved and overseen by the management body;
• b. staff whose professional activities have a material impact on the investment firm’s risk profile or assets under management are identified appropriately and in line with regulatory technical standard under Article 30(4) of Directive (EU) 2019/2034;
• c. variable remuneration does not affect the investment firms ability to ensure a sound capital base and is awarded in compliance with the requirements in Article 32 of Directive (EU) 2019/2034;
• d. remuneration of internal control functions where established is not linked to the performance of the activities the control functions monitor and control and does not otherwise likely compromise their objectivity;
• e. investment firms established, where applicable, a remuneration committee to advise the management body in its supervisory function and to prepare the decisions to be taken by this body. Where no remuneration committee has to be established, the requirements concerning the remuneration committee should be construed as applying to the management body in its supervisory function; and
• f. remuneration policy is subject to an independent internal review by internal control functions.

When applying the principle of proportionality, competent authorities should consider the criteria laid down in the EBA Guidelines on sound remuneration policies, in particular whether the investment firm is authorised to provide the services and activities referred to in Directive 2014/65/EU, point (2), (3), (4), (6) and (7) of Section A of Annex 1. In such case the competent authority should as a general principle expect a higher level of sophistication, in particular, if the investment firm is authorised to hold clients’ money or assets.