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EFAMA expressed its deep reservations around the EBA’s interpretation of the proportionality principle, especially with regard to its (non‐)application to the variable remuneration principles under Article 94 of CRD IV, as suggested in the consultation paper. In this respect, EFAMA invites the EBA to consider our following preliminary remarks:
EFAMA is of the opinion that the EBA’s proposed Guidelines are incompatible with the will of the EU Legislator to allow for proportionality with regard to remuneration policies for subsidiaries that are neither credit institutions (i.e. falling expressly within the remit of CRD IV), nor investment firms (i.e. falling within the remit of the MiFID framework). Particularly with regard to the principle imposing a cap on variable remuneration (“bonus cap”), EFAMA wishes to remind the EBA that its application to the UCITS remuneration framework had been proposed and thoroughly discussed during the European Parliament and Council “trilogues” concerning “UCITS V” and, subsequently, deliberately discarded;
EFAMA believes that the EBA’s reading of the relevant clauses of CRD IV – as reflected in the consultation paper and considering the principle of proportionality applied to the variable remuneration principles of the directive – would not be in line with their intended objective. Differently, EFAMA contends that the intention of the EU Legislator was for less‐complex firms and/or non‐CRD subsidiary institutions to apply the remuneration principles under Article 94 proportionately;
EFAMA would also like to stress that there are different underlying rationales for applying remuneration rules to credit institutions and asset management companies: whereas for the former, remuneration rules are intended to align risks from dealing on own account with the need for credit institutions to reconstitute their capital base, for asset management companies, remuneration rules intend to improve the alignment between the interests of the portfolio manager and its clients. Such differences should be appreciated in light of the fact that the notion of “identified staff” in the CRD context does not equate with the corresponding notion under the AIFM/UCITS framework;
Finally, EFAMA calls on the EBA to recognise that AIFM and UCITS sectoral remuneration rules lie within the remit of the ESMA and that poor coordination among the ESAs risks making present harmonisation efforts more difficult. In this regard, EFAMA believes it extremely useful for the EBA and the ESMA to issue a joint consultation on the applicability of the proportionality principle, so as to avoid the risk of a one‐sided interpretation of group remuneration policies. This would be most welcome by our industry, especially at a time when the ESMA is drafting its own consultation around remuneration Guidelines for UCITS management companies and the general orientation is to seek a broad alignment with the existing remuneration Guidelines for AIFMs for the purpose of greater harmonisation.