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
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 end date: 2 June 2021