The Financial Conduct Authority (FCA) has launched Consultation Paper CP26/27: Remuneration: Solo-regulated firms’ rules reform, proposing a significant simplification of the remuneration framework for solo-regulated firms, including AIFMs, UCITS management companies and MIFIDPRU investment firms. The proposals aim to replace the current complex and prescriptive framework with a more proportionate, outcomes-focused approach
Key Proposed Changes to the FCA Remuneration Framework
The FCA is proposing to replace the existing AIFM, UCITS and MIFIDPRU remuneration codes with a single consolidated remuneration code, SYSC 19AA, as part of a broader effort to simplify a regime that many firms consider overly complex and prescriptive. The new framework would adopt a more outcomes-focused approach, giving firms greater flexibility to design remuneration arrangements that reflect their size, business model and risk profile, while placing greater emphasis on effective governance, management oversight and accountability. Firms would be expected to demonstrate that their remuneration practices promote good conduct, sound risk management, healthy culture and alignment with client and investor interests, while reducing unnecessary compliance burdens.
Greater Flexibility on Deferral, Malus and Clawback
The consultation proposes significant changes to some of the most contentious aspects of remuneration regulation:
- Deferral
The FCA proposes replacing existing fixed and detailed deferral requirements with a principles-based framework. Firms would have greater discretion in determining whether and how variable remuneration should be deferred, subject to governance and risk considerations. An alternative threshold-based approach is also being consulted upon.
- Malus and Clawback
While malus and clawback mechanisms would remain available as important risk management tools, the FCA proposes removing mandatory requirements governing their application. Firms would instead decide how and when such mechanisms should be used, based on their own risk assessment and governance arrangements.
These proposals signal a move away from a “one-size-fits-all” model and towards greater management accountability.
- Governance and Reporting Simplifications
The FCA is also proposing to streamline governance obligations.
Key changes include:
- Removing the mandatory requirement for remuneration committees.
- Removing the requirement for annual independent remuneration reviews.
- Retaining broader expectations around governance, oversight, and accountability.
In addition, the FCA proposes abolishing the MIF008 remuneration reporting return and the associated reporting requirement currently applicable to MIFIDPRU firms.
These measures are expected to reduce compliance costs and administrative burden, particularly for smaller firms with less complex risk profiles.
Scope and Alignment with AIFM Reform
The proposed framework forms part of the FCA’s wider AIFM reform agenda and would continue to apply to UCITS management companies while narrowing the AIFM scope to medium and large firms. The FCA intends to focus remuneration requirements on firms whose activities present greater risks to consumers and markets, supporting a more proportionate and risk-based regulatory approach.
Benefits for Firms
The FCA expects the proposed reforms to reduce compliance costs and complexity, provide greater flexibility in remuneration design, improve proportionality and support firms in attracting and retaining talent while maintaining effective risk management. The proposals also support the FCA’s objective of enhancing the UK’s international competitiveness and growth.
Next Steps
The consultation closes on 16 September 2026, with final rules expected in Q1 2027. If adopted, the new consolidated remuneration code will introduce a more proportionate, principles-based framework, reducing regulatory complexity while giving firms greater flexibility to design remuneration arrangements that reflect their business models and risk profiles. For AIFMs, implementation will be phased alongside wider AIFM reforms.
How Complyport Can Help
Complyport can support your firm through:
- Gap analysis and impact assessments;
- Remuneration policy and governance reviews;
- MRT identification and remuneration structure assessments;
- Consultation response and implementation support; and
- Training, compliance advice and ongoing oversight.
Contact Us
To understand how these changes may impact your firm, or to discuss how Complyport can support in preparing for the proposed remuneration framework, arrange a meeting with one of our Subject Matter Experts.
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