FSB compensation workshop 2019: Key takeaways
This note provides key takeways from a November 2019 workshop with banks, insurance and asset management firms, trade associations and academia on the implementation of compensation reforms. As part of its work to monitor implementation of its Principles for Sound Compensation Practices and their Implementation Standards, the FSB engages regularly with firms across financial sectors to assess the extent to which the standards have been effectively implemented. This workshop focused on:
Assessing the effectiveness of compensation policies – the discussion considered the steps firms are taking to assess the effectiveness of compensation policies and practices they have established and implemented.
Use of data by firms as part of compensation practices – participants considered how firms use data to implement compensation policies and practices.
Regulatory and legal issues – the discussion focused on the extent to which legal barriers and conflicts between elements of the Principles and Standards and regulatory frameworks exist, and possible steps to address these.
Developments on compensation and risk alignment research – participants discussed academic research and empirical evidence on the effectiveness of compensation and risk alignment.
The takeaways from the workshop are an input into the FSB’s ongoing work to assess effective compensation practices.