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… as FSA releases draft remuneration code

The FSA has introduced a draft code of practice for remuneration that sets minimum risk management standards for pay policies.

It will use the code to assess the quality of remuneration policies in the UK sector to ensure they do not promote excessive risk.

“If a firm’s remuneration policies are not aligned with sound risk management it is likely that those policies will provide incentives for employees to act in ways that might undermine it,” the regulator said in a statement.

The code calls for clear pay procedures, the avoidance of conflicts of interest, alignment of incentive pay with long-term company profitability, and the inclusion of non-financial performance metrics.

The FSA will consult on the code and further proposals for remuneration policy in March.