PRA is consulting on correcting an error in the PRA rulebook which currently means the definition of “higher paid material risk taker” is not aligned with PRA’s approach in SS 2/17. The error happened when PRA made its rulebook changes to implement CRD V. The consultation follows PRA’s statement in February, and PRA proposes that firms would need to apply the corrected definition to remuneration that has been paid, vested, or is subject to an obligation to pay or vest created before that date in respect of the first performance year beginning on or after 29 December 2020.
The current wording states that a higher paid material risk taker is an individual whose annual variable remuneration exceeds 33% of their total remuneration and whose total remuneration exceeds £500,000. The “and” should in fact be “or”.
PRA needs comments by 26 May and plans to publish its final poicy in Q2 2021.