Update: transposition of CRD V and EBA Guidelines


In our Newsflash dated 21 June 2021, we informed you about the definitive version of the draft law transposing CRD V into Belgian banking law. The Belgian law of 11 July 2021 implementing EU financial directives (CRD V; BRR2; IFD; Solvency II) finally transposed CRD V into our Belgian arsenal. 

In the meantime, the EBA published their “draft final” Guidelines on Sound Remuneration Policies under CRD V (hereafter “the Guidelines”). The ‘draft final’ Guidelines will become ‘final’ Guidelines once they will be ratified by the EU Parliament. Further amendments to the text are not expected. These updated Guidelines will apply to firms in scope of CRD V as from 31 December 2021, i.e. the 2022 performance year will be the first year in scope of the new Guidelines.

It provides for a number of clarifications, including (non-exhaustive list): 

Requirements for gender neutral remuneration policies and in particular equal pay analysis from a gender perspective 

The EBA have formalised their expectations of firms in respect of gender neutrality across their remuneration policies. The Guidelines do include a number of specific requirements that may go beyond current practice in some Belgian organisations. In particular, institutions are required to document appropriately the value of the position for all staff members or categories of staff and determine which positions are considered as having an equal value, e.g. by implementing a job classification system, taking into account at least the type of activities, tasks and duties assigned to the position or staff member. Where a job classification system is used for determining pay, it should be based on the same criteria for men, women and staff of diverse genders and drawn up so as to exclude any discrimination, including on grounds of gender. In other words, the Guidelines as drafted state that an analysis of job descriptions will need to be completed to determine those roles which are of equal value across different areas of the organisation.

Firms are also expected to monitor the overall gender pay gap including the ratio between the average remuneration of all male and female staff with a split comparison between Material Risk Takers (excluding the management body), the management body (split by the management and supervisory function), and other staff. These ratios should be calculated on a country-by-country basis and where material differences between genders are found the firm needs to provide rationale for the disparity, and where appropriate take action, whilst also being able to demonstrate that their remuneration policies are gender neutral and provide equal opportunities.

Incorporation of ESG risk factors in the remuneration policy

Institutions’ remuneration policies must be aligned with their risk profile. In that respect, the institution’s remuneration policy should reflect environmental, social and governance (ESG) risk-related factors.

Majority independent RemCo 

Where a firm is defined as a global or other systemically important institution (G-SIIs and O-SIIs respectively) the requirement is now that “the majority” of members of the Remuneration Committee are independent (including the chair). 

Retention bonuses & Severance pay 

In light of supervisory experience, additional clarification on both severance pay and retention bonuses has been provided. In practice, this is likely to put more onus on firms to substantiate their justification for such awards.

How can PwC help? 

PwC has developed the STRATA job evaluation system, which consists of an analytical method for determining job specific profiles assessed against eight criteria. Our expertise in job evaluation and classification systems, combined with Equal-Salary Certification, may help companies to review their policies and practices surrounding gender equal pay. If you are interested in learning more about our expertise, please consult our website on Equal-Salary Certification or contact Bart Van den Bussche.