The 2022 Guidelines replace the former 2013 Guidelines on remuneration policies and practices issued in relation to the MiFID I conflicts of interest and conduct of business requirements applicable in the area of remuneration (the “2013 Guidelines”).
I. Key changes compared to the 2013 Guidelines
The key changes introduced via the 2022 Guidelines compared to the 2013 Guidelines can be summarised as follows:
- The 2022 Guidelines take into account that some of the recommendations included in the 2013 Guidelines have been directly incorporated into the MiFID II framework. These recommendations have accordingly been deleted from the 2022 Guidelines.
- Similarly, recommendations that were included in the 2013 Guidelines, but which have become redundant in consideration of the rules set out in the MiFID II framework (notably former guideline 8 on competent authorities’ supervision and enforcement of remuneration policies and practices) have also been removed in the 2022 Guidelines.
- The remaining former recommendations of the 2013 Guidelines have been largely confirmed in the 2022 Guidelines, since the latter are said to still provide “a valuable contribution in terms of practical examples and clarification on how the requirements should be applied in practice”.
- In addition to the aforementioned confirmation of the 2013 Guidelines, the 2022 Guidelines take into account the fact that, unlike MiFID I, MiFID II now includes specific requirements pertaining to remuneration, notably with respect to management approval and oversight duties, internal organisation requirements and conduct of business rules.
- The 2022 Guidelines further take into account the results of the supervisory activities conducted by national competent authorities on the topic of remuneration.
Based on the foregoing, the recommendations included in the 2022 Guidelines have been reorganised and divided into three new sections:
1) Design of remuneration policies and practices
3) Controlling risks related to remuneration policies and practices
II. Application timeline
The 2022 Guidelines specify that they will apply to competent authorities and firms from six months of their date of publication on ESMA’s website in all EU official languages.
The 2013 Guidelines will cease to apply on the same date.
III. Other recent updates on remuneration requirements
Similar to ESMA, the European Banking Authority (“EBA”) has also recently published guidelines on sound remuneration policies under IFD (applying as of 30 April 2022) and updated the guidelines on sound remuneration policies under CRD (applying as of 31 December 2021).
To read the new ESMA Guidelines on MiFID II remuneration requirements, click here_
To read the new EBA Guidelines on sound remuneration policy under CRD, click here_
To read the new EBA Guidelines on sound remuneration policy under IFD, click here_
If you require any assistance in relation to remuneration requirements under MiFID II, IFD or CRD, contact us.