FSA remuneration code

So, it's out. I'll leave the analysis of what the FSA has actually changed to those with a bit more knowledge than me. A few observations of my own though. First up, here's what the FSA says about the role of shareholders in Chapter 2:

Market discipline has not been effective in limiting the adverse effect of poor remuneration practices on risk management, particularly at large systemically relevant institutions. In many cases shareholders have allowed management to introduce compensation policies that in effect subordinate the interests of shareholders to those of employees, particularly senior employees engaged in trading businesses.

This is true, but as we know things have all changed now. This can be seen by the heightened engagement by fund managers with BOFIs over remuneration. Of the list of 17 BOFIs listed by Walker, there have been serious shareholder revolts over remuneration this year at RBS, and.... err.... that's it. And that was primarily driven by the state via UKFI.

Nevertheless we can see the importance accorded by fund managers to getting remuneration policy right by the number of them that seem to have responded to the FSA's consultation (see annex 1):

err...

Forget that. We know that the industry is planning to up its game in this area because of what the ISC - the peak body for institutional shareholders - said specifically about remuneration in its statement issued in response to the crisis:

err...