| Rendering contravening provisions of agreements void | ||||
|---|---|---|---|---|
| 1 | R | Any provision of an agreement that contravenes a prohibition on persons being remunerated in a way specified in a rule to which this rule applies (a ‘contravening provision’) is void. | ||
| 2 | R | A contravening provision does not cease to be void because: | ||
| (1) | the firm concerned ceases to satisfy any of the conditions set out in rules 16.3 and 16.4 of the PRA Remuneration Rules; or | |||
| (2) | the material risk taker concerned starts to satisfy both of the conditions set out in rule 16.7(1) and (2) of the PRA Remuneration Rules. | |||
| 3 | R | A contravening provision will not be void where: | ||
| (1) | it is contained in an agreement that was in force at the time when the rule the provision contravenes was first made; and | |||
| (2) | it has not subsequently been amended so as to contravene that rule. | |||
| 4 | G | (1) | The effect of SYSC 19D Annex 1.3R is to prevent contravening provisions being rendered void retrospectively. However, contravening provisions may be rendered void if they are contained in an agreement made after the rule containing the prohibition is made by the FCA but before the rule comes into effect. | |
| (2) | For example, the FCA makes a rule containing a prohibition on 1 March 2025 but the rule does not come into effect until 1 September 2025. A dual-regulated firm takes actions in June 2025 that contravene the provision. Given that the rule has been made, but has not yet come into force, the contravening provision may be rendered void. | |||
| 5 | R | (1) | A pre-existing provision is not rendered void by SYSC 19D Annex 1.1R. | |
| (2) | In this Annex, a pre-existing provision is any provision of an agreement that would (but for this rule) be rendered void by SYSC 19D Annex 1.1R that was agreed at a time when either: | |||
| (a) | the firm concerned did not satisfy any of the conditions set out in rules 16.3 and 16.4 of the PRA Remuneration Rules; or | |||
| (b) | the material risk taker concerned satisfied both of the conditions set out in rule 16.7(1) and (2) of the PRA Remuneration Rules. | |||
| (3) | But an amendment to, or in relation to, a pre-existing provision is not to be treated as a pre-existing provision where the amendment is agreed at a time when both: | |||
| (a) | the firm concerned satisfies at least one of the conditions set out in rules 16.3 and 16.4 of the PRA Remuneration Rules; and | |||
| (b) | the material risk taker concerned does not satisfy both of the conditions set out in rule 16.7(1) and (2) of the PRA Remuneration Rules. | |||
| 6 | R | For the purposes of this annex, it is immaterial whether the law which (apart from this annex) governs a contravening provision is the law of the United Kingdom, or of a part of the United Kingdom. | ||
| Recovery of payments made or property transferred pursuant to a void contravening provision | ||||
| 7 | R | In relation to any payment made or other property transferred in pursuance of a contravening provision other than a pre-existing provision, a firm must take reasonable steps to: | ||
| (1) | recover any such payment made or other property transferred by the firm; and | |||
| (2) | ensure that any other person (P) recovers any such payment made or other property transferred by that person. | |||
| 8 | R | SYSC 19D Annex 1.7R continues to apply in one or both of the following cases: | ||
| (1) | the firm concerned ceases to satisfy any of the conditions set out in rules 16.3 to 16.4 of the PRA Remuneration Rules; | |||
| (2) | the material risk taker concerned starts to satisfy both of the conditions set out in rule 16.7(1) and (2) of the PRA Remuneration Rules. | |||
| 9 | G | The rule in SYSC 19D Annex 1.7R(2) would, for example, apply in the context of a secondment. Where a group member seconds an individual to a firm and continues to be responsible for the individual’s remuneration in respect of services provided to the firm, the firm would need to take reasonable steps to ensure that the group member recovers from the secondee any remuneration paid in pursuance of a contravening provision. | ||
| Replacing payments recovered or property transferred | ||||
| 10 | R | (1) | A firm must not award, pay or provide variable remuneration to a person who has received remuneration in pursuance of a contravening provision other than a pre-existing provision (the ‘contravening remuneration’) unless the firm has obtained a legal opinion stating that the award, payment or provision of the remuneration complies with the dual-regulated firms Remuneration Code. | |
| (2) | This rule applies only to variable remuneration relating to a performance year to which the contravening remuneration related. | |||
| (3) | The legal opinion in (1) must be properly reasoned and be provided by an appropriately qualified independent individual. | |||
| (4) | Paragraph (1) continues to apply in one or both of the following cases: | |||
| (a) | the firm concerned ceases to satisfy any of the conditions set out in rules 16.3 and 16.4 of the PRA Remuneration Rules; | |||
| (b) | the material risk taker concerned starts to satisfy both of the conditions set out in rule 16.7(1) and (2) of the PRA Remuneration Rules. | |||
| Notification to the FCA | ||||
| 11 | G | [deleted] | ||
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SYSC 19D Annex 1 Detailed provisions on voiding and recovery (SYSC 19D.2A.12R)
You are viewing SYSC 19D Annex 1 Detailed provisions on voiding and recovery (SYSC 19D.2A.12R) as of . SYSC 19D Annex 1 Detailed provisions on voiding and recovery (SYSC 19D.2A.12R) was last updated on 16/10/2025.
SYSC 19D Annex 1 Detailed provisions on voiding and recovery (SYSC 19D.2A.12R)
16/10/2025