Barclays agrees with Guideline 1. Barclays notes that the Guideline is consistent with similar guidance provided by UK Financial Conduct Authority in its final guidance on risks to customers from financial incentives published in January 2013, which Barclays already applies.
Barclays would welcome further clarification regarding guideline 1.6.b. on page 18 which states:
‘… institutions should not design remuneration policies and practices that promote, to the potential detriment of consumers, the offer or provision of a specific product or category of products over other products, such as the offer or provision of products which are more profitable for the institutions over others which are less profitable.’
Barclays already operates a practice of not promoting a specific product over other products within the same category of products. There may be circumstances however, when it is appropriate to differentiate between categories of product, for example reflecting the time or effort to discuss and fulfil a product with a customer. This helps to ensure that product categories that are simple and quick to fulfil are not preferred over those that require more time to explain the features and complete paperwork. The purpose of the policies and practices should be to recognise and identify potential risks any such differentiation may bring to good customer outcomes, and to have the appropriate control and mitigation in place.
Barclays would also welcome clarification on the proposed territorial scope of the Guidelines. For example, is it envisioned that the provisions as enacted by National Competent Authorities would be applicable to all subsidiaries of EU headquartered institutions?
Barclays agrees with Guideline 2. We believe that this encompasses all of the key aspects that will ensure appropriate documentation of remuneration policies and practices are in place to reduce the risk of poor customer outcomes.
Barclays agrees with Guideline 3. We believe that this encompasses all of the key aspects that will ensure appropriate approval and monitoring of remuneration policies and practices are in place to reduce the risk of poor customer outcomes.
We recommended a small change to guidelines 3.2 and 3.5 to enable a management body or supervisory function to delegate the monitoring of remuneration policies and practices to an appropriate committee (for example the remuneration committee):
3.2: “The management body (or a body formally delegated by the management body) should seek a sound independent advice on the institution’s remuneration policies and practices in relation to the fulfilment of these guidelines. Where established, the remuneration committee may provide this independent advice.”
3.5: “The institution should review, at least annually, the remuneration policies and practices and confirm that they continue to be fit for purpose. Where established, the supervisory function (or a body formally delegated by the supervisory function) should conduct this review.”
Barclays believes that the various aspects of guidance set out covers all of the key aspects to ensure effective design, documentation, approval and monitoring of remuneration policies and practices within financial services. This includes the appropriate identification, management and control of risks associated with such policies and practices in order to reduce the risk of poor customer outcomes.
Barclays is supportive of this initiative and its focus on ensuring good customer outcomes by embedding appropriate standards into remuneration policies and practices across the industry.