The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook. PS18/21 contains the updated supervisory statement SS2/17 on remuneration and provides feedback to responses to the consultation paper CP9/21, which had proposed correction to the definition of "higher paid material risk taker." The changes outlined in PS18/21 will take effect from July 23, 2021. PS18/21 is relevant to PRA-authorized banks, building societies, and designated investment firms but not to credit unions and authorized insurers.
CP9/21 had proposed to correct an error in the definition of "higher paid material risk taker," which was introduced when the final rule instrument "PRA Rulebook: CRR Firms: Remuneration (Capital Requirements Directive 5 (CRD5)) instrument 2020" was published as part of PS29/20 on CRD5. The proposal aimed to align the this definition with the PRA intentions, as set out in PS26/20 on CRD5, of matching the conditions set out in SS2/17, for the disapplication of remuneration rules at an individual level. On consideration of the two responses received to CP9/21, PRA decided to publish the policy as proposed. The updated instrument is now cited as the Remuneration Instrument 2021. PRA also published SS2/17 that sets out expectations on how firms should comply with the requirements of the remuneration part, enabling firms to make judgments that advance the objectives of PRA. SS2/17 is intended to be read with the rules in the Remuneration Part of the PRA Rulebook. in SS2/17, references related to the UK’s membership of EU (covered by the policy in PS18/21) have been updated as part of these proposals to reflect the end of Brexit transition. Unless otherwise stated, any remaining references to EU or EU-derived legislation refer to the version of that legislation which forms part of the retained EU law.
Effective Date: July 23, 2021
Keywords: Europe, UK, Banking, PS18/21, SS2/17, CP9/21, Remuneration, Material Risk Takers, CRD5, Basel, Operational Risk, PRA Rulebook, Remuneration Instrument 2021, Governance, PRA
Previous ArticleESMA Responds to Proposal Related to Sustainability Standards Board
In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.
The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.
The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.
The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.
The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.
The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.
The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.