PRA and FCA have published feedback on their consultations on enhancing proportionality in respect of the remuneration rules in respect of dual-regulated and small firms. While the regulators needed to feed back independently, they have published their final policy jointly.
The rule changes affect only dual regulated firms which are banks, building societies and PRA-designated investment firms subject to the Remuneration Part of the PRA Rulebook and SYSC 19D in the FCA Handbook.
The rules will change proportionality threshold and exempt firms who meet them from the malus and clawback requirements of the rules. The thresholds must be met not just by each individual firm but also by the group on a consolidated basis. The regulators have made changes from the original proposals to set the clear thresholds that groups will need to meet. The new thresholds have been set to be consistent with the new “small domestic deposit taker” definition and with reference to other criteria under the Strong and Simple framework.
The changes take effect from 8 December.