EBA欧洲银行-CP23_UNI-Europa-Finance_4页_161kb

Summary of Contribution to the CEBS' "High-level Principles of Remuneration Policies"

Core Content

The document outlines UNI Europa Finance's contribution to the CEBS' consultation on remuneration policies in the financial services sector. It emphasizes the need for comprehensive and risk-conscious remuneration systems that extend beyond top executives and traders to all levels of employees, particularly those in sales and advice functions. The main objective is to ensure that remuneration structures promote prudent financial advice, good customer service, and long-term sustainability, while reducing the risk of systemic instability in financial markets.

Main Views and Key Information

1. Incentive Structures and Sales Targets

• Realistic and Fair Systems: Remuneration and incentive systems should be based on long-term, sustainable business goals and be risk-conscious, not primarily focused on short-term revenue.
• Customer-Centric Incentives: Incentives should reward good customer service and qualified advice, not only product sales. Sales targets should not be tied to individual performance or remuneration.
• Avoid Excessive Targets: High sales targets can cause stress and lead to unethical practices. These should be set through consultation with employees and unions.
• Transparent and Objective Pay: Variable pay and bonuses must be transparent, based on objective criteria, and include both quantitative and qualitative measures such as cooperation and compliance.

2. Negotiating Criteria for Pay Policies

• Collective Agreements: Performance-related pay criteria should be negotiated in collective agreements between management and union representatives.
• Union Monitoring Rights: Trade unions should have the right to monitor the implementation of remuneration policies.

3. Training and Financial Education

• Continuous Training: Employees must receive sufficient and ongoing training to understand the implications of financial products on customers.
• Standardized Competences: Global principles on the competences required to sell financial products should be developed.
• Financial Education Code: A code of conduct on financial education should be established to promote prudent advice and customer awareness, possibly in cooperation with the OECD and ILO.

4. Directors' Pay

• Reasonable Variable Pay: Variable pay for executives should not exceed the fixed component of their salary.
• Long-Term Incentives: Bonuses should be a mix of shares and cash, staggered over multiple years, and include claw-back provisions.
• Independent Remuneration Committees: Boards should include independent and knowledgeable members, including employee representatives, to ensure balanced decision-making.

5. Supervision and Risk Management

• Bottom-Up Supervision: Supervision should not only be top-down but also include a bottom-up approach that considers employee practices and motivations.
• Employee Involvement: Employees are best positioned to provide insights into daily operations and potential risks, which should be systematically included in risk assessments.
• Stakeholder Involvement: Trade unions, consumer associations, and other stakeholders should be involved in financial oversight mechanisms to ensure transparency and accountability.

6. Charter on Responsible Sale of Financial Products

• Company-Wide Commitment: Each financial institution should develop a charter on responsible sale of financial products, which should be public, verifiable, and agreed upon by management, unions, and other stakeholders.
• Implementation Oversight: The charter should be monitored by a group-level department or an ombudsman, and supervised by a committee including key stakeholders.
• Regular Reporting: Implementation reports should be published, including details of sales practices and remuneration systems.

7. Regulatory and Legal Measures

• Constant Updates: Financial supervision standards and risk assessment procedures should be continuously updated to reflect industry innovations and new risks.
• Legal Consumer Protection: Laws should ensure high levels of consumer protection, requiring financial institutions to provide proper and interest-based advice.
• Fiduciary Duties: Top-level decision-makers must be held accountable for pursuing long-term, sustainable strategies and avoiding undue risk-taking.

Conclusion

The document calls for a comprehensive, employee-inclusive, and risk-aware approach to remuneration in the financial services sector. It highlights the importance of aligning incentive structures with ethical practices, ensuring transparency, and involving all relevant stakeholders in oversight and policy development to prevent future financial crises.