NFU - Nordic Financial Unions

NFU is in favor of the idea of remuneration policies and practices being consistent with and promoting sound and effective risk management. However, the current scope might leave space for a very wide interpretation of the category of risk takers, to the level of including middle management and staff in supporting functions who are not immediately concerned with risk taking.
According to Recital 13 of the draft RTS, the total remuneration that members of staff are entitled to is seen as exclusively depending on the performance of staff in connection to achieving the institutions´ business objectives. This is, as the Recital further suggests, presumable, and in fact it does not take into full account the existence of collective agreements which define the remuneration for most employees. It is equally important to acknowledge that most employees do not receive excessive amounts of variable remuneration. In fact, in the area of banking, local agreements on variable remuneration can be extremely limited, which is the case, for example, in Denmark.
Thus, and in connection to the above reflections on scope and type of remuneration, it needs to be clarified that any legal provisions regarding remuneration do not apply to policies and/or provisions agreed in a collective agreement. The possibility for collective bargaining should not be hampered, in this case, by a too broad scope which would include a too wide number of employees, including those who in fact are not immediately concerned with risk taking. NFU therefore suggests that, in due consideration of the Nordic model and collective bargaining generally, a reference to collective agreements is made in the RTS. This is in accordance to Article 153,5 TFEU; Recital 69 of CRD IV, recital 10 in Directive 2014/91/EU and Recital 14 in Directive 2010/76/EU.
The definitions, especially in Article 2, can be seen as too broad and aiming to include employees not directly concerned with risk taking. If Article 92(3) of the Directive is taken as a background for developing the definitions, then the definitions should address ´management body´ and ´senior management´ rather than overall managerial responsibility in a general context.
The newly included qualitative criteria indeed gives leeway for too broad interpretation of the list of employees that should be included in scope. This is also due to the fact that the list not only includes core but also supportive business functions, some of which can nowadays be fully or partially outsourced or carried out through innovative business models, hence proving the criteria difficult to uphold.
Including all managerial levels into the scope would also assume that all recommendations are taken into account equally, whereas the influence of middle management and other supporting staff is often inferior to the one of senior managers. It is also important to prevent that responsibility on senior level is not being diluted by including too many other parties in the scope of risk takers within an institution.
Although there are challenges in identifying risk takers by function due to greater variety of positions and functions, in principle, remuneration in fixed amounts is not a clear-cut indicator for risk takers. Such consideration does not take into account the overall difference in wage levels in EU, and thus may twist the understanding of the number of risk takers in institutions of similar size and profile, but in different countries. At the same time, using fixed amounts also does not consider the wage developments over time, which undoubtedly shift the number of employees included in the risk takers category. This process might deem even more complex as the RTS foresee prior approval of a supervisory authority when it comes to derogations.
Please kindly refer to our answer to Q5.
Vasilka Lalevska