On 8 September 2021, the PRA published Consultation Paper 18/21 – Remuneration: Identification of material risk takers (CP18/21).
In CP18/21 the PRA sets out proposed changes in respect of the applicable requirements on the identification of material risk takers (MRTs) for the purposes of the PRA’s remuneration regime. In particular the PRA sets out proposals to:
- Revoke the application of the onshored version of Commission Delegated Regulation (EU) No 604/2014 of 4 March 2014 in regards to PRA-regulated firms.
- Insert the provisions of Commission Delegated Regulation (EU) 2021/923 of 25 March 2021 into the Remuneration Part of the PRA Rulebook as amended only as needed for consistency with PRA Rulebook style. The PRA proposes to amend the substantive content of the Delegated Regulation only as required to reflect the UK’s withdrawal from the EU and the end of the transition period, as well as to ensure consistency with the wider PRA Rulebook. The PRA considers that this approach will ensure that the PRA Rulebook is consistent with the changes implemented in December 2020. In particular, the remuneration thresholds set out in the Delegated Regulation are denominated in Euros (EUR). The PRA proposes to redenominate currency references from EUR to GBP by using the average of daily GBP/EUR spot exchange rates over a 12-month period for the relevant performance year, prior to Friday 10 July 2020: £1 = €1.14, rounded to the nearest integer. This is the only substantive change in the proposals.
- Update Supervisory Statement 2/17 to reflect the rule changes and the amended process for excluding an employee identified solely based on the quantitative criteria.
The deadline for comments on CP18/21 is 8 November 2021.
The PRA proposes that the implementation date for the changes resulting from CP18/21 would be from the first performance year starting after the publication of final rules, which, subject to the extent and nature of feedback received, is currently planned for Q4 2021.