FSA remuneration code: bonus rules

The Financial Services Authority remuneration code is intended to end the practice that was common before the banking crisis that bankers received 100% of their annual bonus in cash. The basic elements of the code are that 40% of a bonus must be deferred for at least three years, although this rises to 60% in some cases. Also, at least 50% of any bonuses must be paid in shares or other non-cash instruments. No guaranteed bonuses of more than one year can be paid and only then "in exceptional circumstances to new hires for the first year of services". The consultation period closes on 8 October. The FSA also wants to know by this date which staff fall within the scope of the remuneration code, which is intended to cover all individuals whose activities could pose a risk to a firm – for example, proprietary traders – as well as senior management.