City regulators crack down on bonus framework

Last year, the FCA and PRA issued a consultation paper, which sought views on a number of options for addressing the issue of buy-outs, in which a firm compensates a new employee for any unpaid remuneration that is cancelled when they leave their previous firm.

Following responses to the consultation paper, the PRA and FCA will now explore further the option of requiring buy-out awards to be held in a form that permits them to be subject to malus by the previous employer.

The FCA is also issuing new general guidance on the adjustment of variable remuneration to take account of a specific risk or adverse performance.