UK Remuneration

Overview:

The AIFMD, UCITS Directive and the UK’s investment firm prudential regime (IFPR) introduce various remuneration requirements on UK managers, ranging from certain limitations to variable remuneration, to the disclosure of quantitative and qualitative information on remuneration policies and practices. The IFPR is set to take effect on 1 January 2022 and introduces new remuneration requirements for UK MiFID investment firms and are divided in basic, standard, and extended remuneration obligations which may run in parallel to the requirements under the AIFMD and/or UCITS Directive.

Affected firms:

The IFPR will apply to any MiFID investment firm authorised and regulated by the Financial Conduct Authority that is currently subject to any part of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR) including investment firms subject to IFPRU or BIRPU, matched principal dealers and exempt CAD-firms, among others.  The IFPR will extend the remuneration requirements to large or interconnected CPMI firms and will be effective as of 1 January 2022.

Next action: 

The FCA has published its final rules on the IFPR remuneration requirements. In August, the FCA sought views on its third and final IFPR consultation which covered the remuneration disclosure requirements. AIMA's response to the consultation can be found here. The final IFPR remuneration rules have been published.

AIMA has worked with ACA Compliance and Travers Smith to develop an implementation guide to assist member firms that will be required to transition to IFPR. 

In addition, the European Commission is currently considering the scope and nature of the changes to the AIFMD Level 1 Directive and to the Level 2 Delegated Regulation. They may propose introducing de minimis thresholds to align the AIFMD rules on remuneration with similar regimes provided in other sectorial legislation. A legislative proposal is expected to be published in November or December 2021. We continue to advocate that remuneration principles should apply in a manner that is appropriate to the AIFM’s size and internal organisation, and to the nature, the scope and complexity of their activities.  

(Last updated: 22 October 2021)