PRA Proposes to Correct an Error in Remuneration Part of the Rulebook

The proposal is intended to align the "higher paid material risk taker" definition with the intention of PRA of continuing the approach outlined in SS2/17 on remuneration. PRA identified an error in the definition of "higher paid material risk taker" in Rule 1.3 in the Remuneration Part of the PRA Rulebook. The error was introduced as part of the policy statement PS29/20 on the fifth Capital Requirements Directive (CRD5). The erroneous definition states that "higher paid material risk taker" is defined as an individual whose annual variable remuneration exceeds 33% of their total remuneration and whose total remuneration exceeds GBP 500,000. This implies that an individual would need to meet both of these conditions to be considered a "higher paid material risk taker." However, PRA intended the definition to capture individuals who meet either of these conditions. Therefore, CP9/21 is proposing to change the "and" in the definition to "or." Thus, the correct text should convey that an individual should be treated as a “higher paid material risk taker” where either their annual variable remuneration exceeds 33% of their total remuneration, or their total remuneration exceeds GBP 500,000. 

CP9/21 also proposes to make a consequential amendment to Table G in SS2/17, to reflect the updated definition in the table heading. The proposals set out in CP9/21 have been designed in the context of the UK having left EU 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. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework.

Related Links

• Notification
• CP9/21 (PDF)

Keywords: Europe, UK, Banking, Remuneration, PRA Rulebook, CRD5, Basel, SS2/17, CP9/21, Operational Risk, PRA