ESMA: Guidelines on sound remuneration policies under UCITS and AIFMD

ESMA has published these guidelines along with a letter to the EC, Council and Parliament with regard to the proportionality principle and remuneration rules in the financial sector, both of which may be downloaded via the press release below. With regard to UCITS, ESMA expresses its belief that it would not be appropriate for smaller and less complex fund managers to be subject in all circumstances to the requirements on the pay-out process and that it would be disproportionate to apply the requirements to relatively small amounts of variable remuneration and to apply certain requirements to certain staff when this would not result in an effective alignment of interests between the staff and the investors in the funds. Amendments to the AIFMD guidelines relates to the section of these guidelines dealing with the application of the remuneration rules in a group context and is intended to acknowledge the potential outreach of the CRD rules in a banking group, but it is noted that the current AIFMD guidelines will not be amended to bring them into line with the UCITS Guidelines pending clarification on the application of the proportionality principle