The transition period for financial institutions subject to FINMA Circular 2010/01 (Remuneration Schemes) to implement its provisions ended on 31 December 2010. The financial institutions concerned must now submit an implementation report to FINMA by the end of April 2011. FINMA has issued today guidelines for this reporting. FINMA's supervisory experience in 2010 suggests that progress in addressing key areas covered by the Circular is being made, though not evenly across all institutions.
FINMA Circular 2010/01 on Remuneration Schemes, issued in October 2009, gave the banks and insurers affected a transition period until 1 January 2011 to implement its provisions. The financial institutions must now submit an implementation report to FINMA by the end of April 2011. FINMA has issued today guidelines on what should be considered when preparing this report.
In the context of its 2010 supervisory activities, FINMA saw evidence that the financial institutions concerned are reviewing their remuneration practices in light of the Circular's principles and the demands from the marketplace. FINMA noted particular progress being made in the corporate governance of remuneration schemes, e.g. more direct leadership by the boards of directors on remuneration and more involvement by the risk management and internal audit functions. While not all institutions are making the same progress, FINMA noted efforts by institutions to redesign their remuneration instruments to align better with risk and longer-term performance. These efforts include reducing the percentage of cash in bonuses paid and increasing the percentage of remuneration that is deferred. Furthermore, the conditions for deferred remuneration are being tightened and alternatives, such as setting caps on the overall remuneration of any single manager, are being pursued.
Contact
Dr Alain Bichsel, Head of Communications, Tel. +41 (0)31 327 91 70, alain.bichsel@finma.ch
