United Kingdom: Developments in financial services settlement agreements

In brief

Every settlement agreement involves a delicate negotiation, and those in the financial services sector are particularly complex for regulatory reasons. In a briefing published by Regulatory Intelligence, Monica Kurnatowska, Gillian Parnell and Annabel Mackay discuss developments in this area.


Key takeaways

  • Settlement agreements in the financial services sector are particularly complex because regulatory rules operate to restrict the employer's freedom in relation to the settlement amount, deferred remuneration and post-termination matters.
  • In turn, regulated employees do not want to give up their right to dispute decision-making in relation to deferred remuneration and/or the content of regulatory references. This regulatory context can make it challenging to reach an agreement, particularly where the reasons for termination are disputed.
  • Employers should ensure that the reasons for payment and criteria used to justify settlement awards are documented, justifiable, and consistent with the circumstances of termination. It may be appropriate to use malus adjustment and employers should preserve the right to apply claw back. Confidentiality obligations should neither claim to prevent the employee from making protected disclosures nor fetter the employer's obligation to give regulatory references.
  • This briefing was first published by Thomson Reuters Regulatory Intelligence.

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