1. Staff in the compliance and internal audit functions must be compensated in a way that makes their incentives independent of the lines of business whose risk taking and incentive compensation they monitor and control. Instead, their performance measures and incentives must be based on achievement of their own objectives (e.g. adherence to internal controls) so as not to compromise their independence. This must apply also to the compliance function staff embedded in independent support or control units.

2. Staff in the compliance and internal audit functions must not be placed in a position where, for example, approving a transaction, making decisions or giving advice on risk and financial control matters could be directly linked to an increase or decrease in their performance-based compensation.

3. If staff in the compliance and internal audit functions receives variable compensation, its total compensation must be made up of a higher proportion of fixed relative to variable compensation.