The EACB has submitted its answer to the ESMA’s consultation on the guidelines on MiFID II remuneration requirements.
The topic of regulating and supervising the remuneration of employees involved in the provision of investment services to clients is not a new one, having been tackled by way of introduction of guidelines by ESMA back in 2013. Since then, several articles under MiFID II and its Delegated Regulation also cover this topic all the way from organisational requirements, conduct of business, conflicts of interest and supervision by national competent authorities (NCAs). Indeed all MiFID II companies and persons in scope have fully adopted these rules, and NCAs have also adopted the ESMA guidelines in their regulatory monitoring and supervision.
The EACB does not see the exact justification to impose additional requirements beyond the current ESMA guidelines and the MiFID II requirements on remuneration. In particular, we do not support the inclusion of all types of remuneration - including fixed remuneration - in the scope of the guidelines. Fixed remuneration as the ongoing salary is not used for rewarding sales results and so there is no evident danger for an employee to act detrimentally to the clients’ interests.
Moreover, we support the comments made by the ESMA Securities and Markets Stakeholder Group (SMSG) in their advice dated 13 October 2021 (ESMA22-106-3638) that:-
- the relevance of the guidelines is difficult to assess, e.g. when talking about the proposals on career progression, the SMSG asks: “Is this guideline a response
to malpractices or a desk-based proposal?” (paragraph 5, page 2, SMSG advice); and
- “warns against intruding into labour legislation, which remains primarily a national competency under the Treaty on the Functioning of the European Union. Legal conflicts may arise in this respect for the financial institutions implementing the guidelines” (page1, SMSG advice).
However, the EACB still has provided its answers to specific questions in the consultation. For further information, please download our paper.