Response to consultation on remuneration of sales staff
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• competent authorities as defined in Article 4(2)(i) of Regulation (EU) No 1093/2010 (EBA authority). With respect to creditors and credit intermediaries referred to in the definition of ‘Institutions’ in paragraph 13, which are not credit institutions, payment institutions or electronic money institutions as referred to in that definition, the guidelines apply to the extent that those authorities have been designated as competent for ensuring the application and enforcement of the provisions of Directive 2014/17/EU to which these guidelines relate;
• financial institutions as defined in Article 4(1) of Regulation (EU) No. 1093/2010.
The banking products and services considered are credit agreements, deposits, payment accounts, payment services, payment instruments, other means of payment, electronic money, other forms of credit and credit agreements in line with Article 1(5)(e) of Regulation (EU) No. 1093/2010.
In designing remuneration policies and practices, intermediaries apply the same principles, taking into account all the risks of a conflict of interests between company, staff and clients - for all products and services (investment, payment or financing).
Even if there is a different scope in term of intermediaries, products and services with respect to the CRDIV and the ESMA Guidelines, ABI believes that the EBA Guidelines do not propose a different design for remuneration policies.
Therefore, in order to avoid conflicts of interests between company, staff and clients, ABI agrees with the design proposed: all companies operating in the same market should respect the same rules, governing investment and banking services.
The principles in the EBA Guidelines are coherent with these provisions and do not generally represent an additional obligation for institutions. It seems appropriate to confirm these provisions in terms of their scope and application to the banking products and services.
However, documentation has to be kept for at least five years from the last date that it applied. The ESMA Guidelines do not contain the same provision. It is necessary to align the two regulations, as they apply, in many cases, to the same institutions.
The principles in the EBA Guidelines are coherent with these provisions and do not generally represent an additional obligation for institutions.
Paragraph 3.2 says “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.”
In order to avoid any doubt, ABI asks for specifying that, such independent advice should be provided by an independent internal control function, or by an independent internal body, or, where established, by the Remuneration Committee of the bank - instead of by an external body.
ABI deems it appropriate the pursuit of maximum harmonization on this item, concentrating on target of consumers.
In addition, ABI highlights that freedom to rule on this specific point creates different solutions and distortive effects from a competitive point of view. For this reason, ABI suggests deleting point 8.
For the same reason ABI suggests deleting point 9, chapter 2 “Finally, competent authorities may wish to consider extending the remuneration principles set out in these guidelines also to remuneration (also referred as “commissions”) paid by financial institutions to credit intermediaries.”
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ABI asks for using the definition of “remuneration” as provided in the EBA Guidelines on sound remuneration policies, published on 21st December 2015.
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As far as the definition of “remuneration” is concerned, ABI suggests specifying how to assess non-monetary forms of remuneration.
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ABI suggests that career progression should not be included in the definition of remuneration, preserving the current definition provided in the EBA Guidelines on sound remuneration policies, published on 21st December 2015.
Career progression is not directly linked to remuneration policies, but rather to the tasks assigned and then typified by applying specific legal, contractual, management and organizational rules. Further, the effects of career progression have a stabilizing nature and are more linked to the notion of fixed remuneration.
Where considered appropriate, it would be possible to evaluate the definition of a principle confirming that career progression depends on skills and responsibilities and is not a way to compensate results and performance that are subject to remuneration policies.
1) Do you agree with Guideline 1 on design?
The EBA Guidelines are addressed to:• competent authorities as defined in Article 4(2)(i) of Regulation (EU) No 1093/2010 (EBA authority). With respect to creditors and credit intermediaries referred to in the definition of ‘Institutions’ in paragraph 13, which are not credit institutions, payment institutions or electronic money institutions as referred to in that definition, the guidelines apply to the extent that those authorities have been designated as competent for ensuring the application and enforcement of the provisions of Directive 2014/17/EU to which these guidelines relate;
• financial institutions as defined in Article 4(1) of Regulation (EU) No. 1093/2010.
The banking products and services considered are credit agreements, deposits, payment accounts, payment services, payment instruments, other means of payment, electronic money, other forms of credit and credit agreements in line with Article 1(5)(e) of Regulation (EU) No. 1093/2010.
In designing remuneration policies and practices, intermediaries apply the same principles, taking into account all the risks of a conflict of interests between company, staff and clients - for all products and services (investment, payment or financing).
Even if there is a different scope in term of intermediaries, products and services with respect to the CRDIV and the ESMA Guidelines, ABI believes that the EBA Guidelines do not propose a different design for remuneration policies.
Therefore, in order to avoid conflicts of interests between company, staff and clients, ABI agrees with the design proposed: all companies operating in the same market should respect the same rules, governing investment and banking services.
2) Do you agree with Guideline 2 on documentation?
The CRDIV and the ESMA Guidelines contain specific provisions about the documentation to be produced for public disclosure and supervision.The principles in the EBA Guidelines are coherent with these provisions and do not generally represent an additional obligation for institutions. It seems appropriate to confirm these provisions in terms of their scope and application to the banking products and services.
However, documentation has to be kept for at least five years from the last date that it applied. The ESMA Guidelines do not contain the same provision. It is necessary to align the two regulations, as they apply, in many cases, to the same institutions.
3) Do you agree with Guideline 3 on approval and monitoring?
On approval and monitoring, CRDIV and the ESMA Guidelines have the same provisions.The principles in the EBA Guidelines are coherent with these provisions and do not generally represent an additional obligation for institutions.
Paragraph 3.2 says “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.”
In order to avoid any doubt, ABI asks for specifying that, such independent advice should be provided by an independent internal control function, or by an independent internal body, or, where established, by the Remuneration Committee of the bank - instead of by an external body.
4) Do you see a need for any additional requirements?
No additional requirements seem to be necessary.5) Do you have any other comments?
Chapter 2, point 8 says “Competent authorities may wish to consider applying these guidelines in relation to persons other than consumers as defined in paragraph [13], such as micro-enterprises and small and medium-sized enterprises (SMEs).”ABI deems it appropriate the pursuit of maximum harmonization on this item, concentrating on target of consumers.
In addition, ABI highlights that freedom to rule on this specific point creates different solutions and distortive effects from a competitive point of view. For this reason, ABI suggests deleting point 8.
For the same reason ABI suggests deleting point 9, chapter 2 “Finally, competent authorities may wish to consider extending the remuneration principles set out in these guidelines also to remuneration (also referred as “commissions”) paid by financial institutions to credit intermediaries.”
* * *
ABI asks for using the definition of “remuneration” as provided in the EBA Guidelines on sound remuneration policies, published on 21st December 2015.
* * *
As far as the definition of “remuneration” is concerned, ABI suggests specifying how to assess non-monetary forms of remuneration.
* * *
ABI suggests that career progression should not be included in the definition of remuneration, preserving the current definition provided in the EBA Guidelines on sound remuneration policies, published on 21st December 2015.
Career progression is not directly linked to remuneration policies, but rather to the tasks assigned and then typified by applying specific legal, contractual, management and organizational rules. Further, the effects of career progression have a stabilizing nature and are more linked to the notion of fixed remuneration.
Where considered appropriate, it would be possible to evaluate the definition of a principle confirming that career progression depends on skills and responsibilities and is not a way to compensate results and performance that are subject to remuneration policies.