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The PRA has identified that there is an error in the ‘higher paid material risk taker’ definition in Rule 1.3 in the Remuneration Part of the PRA Rulebook, introduced as part of the PRA’s implementation of Capital Requirements Directive V (CRD V).
The ‘higher paid material risk taker’ definition currently sets the requirement that an individual would be treated as a ‘higher paid material risk taker’ when:
(a) their annual variable remuneration exceeds 33% of their total remuneration; and
(b) their total remuneration exceeds £500,000.
We have identified that this is an error. An individual should instead be treated as a ‘higher paid material risk taker’ where either condition (a) or (b) is satisfied. This is in line with the PRA’s position outlined in Consultation Paper 12/20 Capital Requirements Directive V (CRD V) and Policy Statement 26/20 Capital Requirements Directive V (CRD V).
As the error in the rule has been identified, we intend to consult on amending the rule at the earliest opportunity. In the meantime, we expect firms to treat individuals as ‘higher paid material risk takers’ where either condition (a) or (b) has been satisfied.
The FCA is aware of the PRA's position on the definition of the term 'higher paid material risk taker' and, in order to maintain alignment, the FCA intends to consult on amending this rule at the next suitable opportunity.