On 28 September 2016, the European Banking Authority (EBA) published its final Guidelines on remuneration policies and practices related to employees involved in the sale of retail banking products and services.
The EBA highlighted the link between poor remuneration policies and practices, and significant cases of misconduct and mis-selling by staff in financial institutions in recent years. The need for the development of requirements to address this issue was identified, with the aim of improving the relationship between the remuneration of sales staff and the fair treatment of consumers.
The Guidelines are amended in places to reflect feedback to the draft. They include separate requirements related to the design, approval and the monitoring of remuneration policies and practices. Also, they clarify the type of information that will be required to be recorded by institutions in order to ensure compliance with the Guidelines.
The key aspects of the final Guidelines are as follows:
The EBA has decided to postpone the application date of these Guidelines from 3 January 2017 to 13 January 2018. Therefore, firms do not need to change their remuneration policies and practices for the coming year, although they should consider the Guidelines when evaluating their remuneration policies and practices for 2017, to ensure a smooth transition when they come into force.