Response to consultation on draft Guidelines on the remuneration and gender pay gap benchmarking exercises under IFD
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The relationship is unclear between the data to be collected on the basis of these draft EBA guidelines and disclosure in accordance with Article 450(1)(k) of the CRR (section 3, para 6 on page 6). Institutions that can legitimately refrain from the retention of variable remuneration and pay out smaller amounts immediately should not be obliged to disclose further extensive information on this point under the EBA guidelines. This would be a violation of the proportionality principle. On top of that, there is no obvious legal basis for such a requirement. Information over and above that required under Article 450(1)(k) of the CRR should not have to be provided.
As a general principle, no disclosure on remuneration practices should have to be made other than those required under Article 450 of the CRR.
As for addressees: which risk takers have to be reported for a group at consolidated level in remuneration benchmarking? Only the group risk takers or the risk takers at all institutions at individual level plus group risk takers (see section 3, para 5 on page 6)?
We are at a loss to understand why the scope of application here should go beyond the scope for the remuneration comparison. Given the low informative value of unadjusted gender pay gap data (see our reply to Q6 below) and the time and effort involved in processing the information, this burden should not be placed on institutions other than those that already provide data for the remuneration benchmarking exercise.
In para 53 and Annex 4, a distinction is made between identified and non-identified employees with respect to gender pay gap data. Analysing these data independently of the quality of work is a suitable means of bringing to light the spread of wages within the workforce and the distribution across genders. This is a legitimate approach, provided that the resulting findings are not used to make qualitative assessments on gender-neutral remuneration since these always necessitate an assessment of the equivalence of activities and tasks.
Paras 49 and 51e: why is different treatment proposed for staff who are absent at the end of the year compared to staff who are absent during the year (e.g. staff on parental leave)?
Para 49c: why are staff newly recruited in the last three months excluded from the exercise?
Although the information to be collected is almost identical in content, formal requirements will oblige institutions to process it twice, giving rise to unnecessary additional work. It would be desirable to standardise the information required for the remuneration comparison with the content of the disclosures on which the benchmarking exercise is based. This would enable institutions to meet their disclosure requirements and remuneration benchmarking requirements simultaneously.
Annex 3: It is not clear how to complete Annex 3. Which column is supposed to be completed by an institution that is not permitted to apply the derogation under Article 94(3)(a) of the CRD?
Q1: Is the section on subject matter, scope, definitions, addressees and implementation appropriate and sufficiently clear?
Under the current interpretation of Germany’s Banking Authority, small and non-complex institutions (SNCIs) only have to disclose so-called key metrics in accordance with Article 447 of the CRR. By contrast, the EBA’s proposed new version of its guidelines on remuneration practices assumes that SNCIs have to disclose certain information in accordance with Article 450 of the CRR (see, for example, section 3, para 3 on page 5). GBIC strongly recommends that it should also be made clear at European level that SNCIs do not have to disclosure information in accordance with Article 450 of the CRR and that the simplified disclosure requirements introduced in CRR II should be retained.The relationship is unclear between the data to be collected on the basis of these draft EBA guidelines and disclosure in accordance with Article 450(1)(k) of the CRR (section 3, para 6 on page 6). Institutions that can legitimately refrain from the retention of variable remuneration and pay out smaller amounts immediately should not be obliged to disclose further extensive information on this point under the EBA guidelines. This would be a violation of the proportionality principle. On top of that, there is no obvious legal basis for such a requirement. Information over and above that required under Article 450(1)(k) of the CRR should not have to be provided.
As a general principle, no disclosure on remuneration practices should have to be made other than those required under Article 450 of the CRR.
As for addressees: which risk takers have to be reported for a group at consolidated level in remuneration benchmarking? Only the group risk takers or the risk takers at all institutions at individual level plus group risk takers (see section 3, para 5 on page 6)?
Q2: Is the section on the scope of investment firms appropriate and sufficiently clear?
Unlike information for the comparison of remuneration trends and practices, information on gender pay gaps also has to be submitted by institutions whose total assets are relatively low (< €5bn) unless they are considered small and non-complex within the meaning of Article 4(1)(145) of the CRR.We are at a loss to understand why the scope of application here should go beyond the scope for the remuneration comparison. Given the low informative value of unadjusted gender pay gap data (see our reply to Q6 below) and the time and effort involved in processing the information, this burden should not be placed on institutions other than those that already provide data for the remuneration benchmarking exercise.
Q3: Is the section on the procedural requirements appropriate and sufficiently clear?
Would it be possible to standardise the reporting periods for gender pay gap and higher ratio data? This would improve transparency.Q4: Is the section on the procedural requirements for competent authorities appropriate and sufficiently clear?
-Q5: Is the section on the instructions for the remuneration benchmarking exercise appropriate and sufficiently clear?
Paras 42 a and b: does this mark a conscious departure from the existing approach so that only the management body of the consolidating entity has to be identified at consolidated level?Q6: Is the section on the instructions for the gender pay gap benchmarking exercise appropriate and sufficiently clear?
Para 17 of the draft guidelines requires gender pay gap data to be collected from all institutions (“privately held, cooperative and savings banks, state-owned banks and investment”) regardless of whether or not they are bound by collective pay agreements. Yet collective agreements ensure there is no gender-specific discrimination. The wording on the scope, especially for small institutions, is unclear. It should be made clear in the guidelines that no data on the gender pay gap of SNCIs need be collected at all, regardless of the size or type of the institution (para 17 of the draft guidelines on page 12). Accordingly, the envisaged sampling should depend solely on the size and not on the category of institution. This will prevent the guidelines being interpreted in such a way that sampling has to be conducted on each category of institution.In para 53 and Annex 4, a distinction is made between identified and non-identified employees with respect to gender pay gap data. Analysing these data independently of the quality of work is a suitable means of bringing to light the spread of wages within the workforce and the distribution across genders. This is a legitimate approach, provided that the resulting findings are not used to make qualitative assessments on gender-neutral remuneration since these always necessitate an assessment of the equivalence of activities and tasks.
Paras 49 and 51e: why is different treatment proposed for staff who are absent at the end of the year compared to staff who are absent during the year (e.g. staff on parental leave)?
Para 49c: why are staff newly recruited in the last three months excluded from the exercise?
Q7: Is the section on the instructions for the data quality and in Annex VI appropriate and sufficiently clear?
-Q8: Are the Annexes on the data collection appropriate and sufficiently clear?
Annex 1 requires institutions to provide general information and information on the remuneration of all staff. We would like to draw attention to the fact that there is a big overlap between the information to be reported here and the information to be disclosed in accordance with Article 450 of the CRR in conjunction with Implementing Regulation 2021/637. There are good reasons why the consultation paper explicitly points out that the remuneration comparison is based primarily on data disclosed pursuant to Article 450 of the CRR (see section 3, para 3 on page 5). Against this backdrop, we do not understand why Annex 1 requests information over and above data that can be retrieved from the templates completed in accordance with Implementing Regulation (EU) 2021/637. All the more so given that Annex 1, unlike the disclosure templates, breaks the information down into different business lines (such as investment banking, retail banking and asset management). It should also be borne in mind that not all institutions distinguish between these business lines in the same way.Although the information to be collected is almost identical in content, formal requirements will oblige institutions to process it twice, giving rise to unnecessary additional work. It would be desirable to standardise the information required for the remuneration comparison with the content of the disclosures on which the benchmarking exercise is based. This would enable institutions to meet their disclosure requirements and remuneration benchmarking requirements simultaneously.
Annex 3: It is not clear how to complete Annex 3. Which column is supposed to be completed by an institution that is not permitted to apply the derogation under Article 94(3)(a) of the CRD?