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
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