PS18/21 | CP9/21 - Remuneration: Correction to the definition of ‘higher paid material risk taker’

Policy Statement 18/21 | Consultation Paper 9/21

Published on 21 July 2021

Remuneration: Correction to the definition of ‘higher paid material risk taker’ - PS18/21

Overview

This Prudential Regulation Authority (PRA) Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 9/21 ‘Remuneration: Correction to the definition of ‘higher paid material risk taker’ (page 2 of 2). It also contains the PRA’s final policy, as follows:

  • amendments to the Remuneration Part of the PRA Rulebook (Appendix 1); and
  • an updated Supervisory Statement (SS) 2/17 ‘Remuneration’ (Appendix 2).

This PS is relevant to PRA-authorised banks, building societies, and PRA-designated investment firms. This PS is not relevant to credit unions or PRA-authorised insurers.

Summary of responses

The PRA received two responses to the CP. Both respondents made a number of observations on the proposals consulted on, which are set out in Chapter 2. Having considered the responses, the PRA has decided to publish the policy as proposed.

Implementation

All changes outlined in this PS will take effect from Friday 23 July 2021.

References related to the UK’s membership of the EU in the SS covered by the policy in this PS have been updated as part of these proposals to reflect the UK’s withdrawal from the EU. Unless otherwise stated, any remaining references to EU or EU-derived legislation refer to the version of that legislation which forms part of retained EU law.

Policy Statement 18/21

Appendix


Published on 26 April 2021

Remuneration: Correction to the definition of ‘higher paid material risk taker’ - CP9/21

Overview

This Consultation Paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposal to correct an error in the definition of ‘higher paid material risk taker’ in the PRA Rulebook. The purpose of this proposal is to align the ‘higher paid material risk taker’ definition with the PRA’s intention of continuing the approach outlined in Supervisory Statement (SS) 2/17 ‘Remuneration’. This CP follows the PRA statement published on Thursday 25 February 2021, which explained the PRA’s position in relation to the definition of ‘higher paid material risk taker’.  

The proposals in this CP would result in changes to Remuneration Part of the PRA Rulebook and SS2/17.

This CP is relevant to PRA-authorised banks, building societies, and PRA-designated investment firms. This CP is not relevant to credit unions or PRA-authorised insurers

Implementation

The PRA proposes that the implementation for the changes resulting from this CP would take effect upon publication of the final policy. In order to avoid retroactivity, the PRA proposes that firms would not be required to apply the corrected definition to remuneration that has been paid, vested, or is subject to an obligation to pay or vest created before that date in respect of the first performance year beginning on or after Tuesday 29 December 2020. The PRA intends to publish its final policy in Q2 2021.

Responses and next steps

This consultation closes on Wednesday 2 June 2021. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP9_21@bankofengland.co.uk.

The proposals set out in this CP have been designed in the context of the UK having left the European Union and the transition period having come to an end. Unless otherwise stated, any references to EU or EU derived legislation refer to the version of that legislation which forms part of retained EU law. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework.

Consultation Paper 9/21

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