Published on 30 July 2014
Clawback - PS7/14
This policy statement (PS) sets out the PRA’s response to feedback received from the consultation on clawback (CP6/14), which closed on 13 May, together with the final rule on clawback. The rule will come into force on 1 January 2015.
Background
In CP6/14, the PRA consulted on a proposal requiring firms to be able to apply clawback to vested variable remuneration on a group-wide basis. The proposal was in accordance with the PRA’s existing approach to proportionality and would apply to level one and two firms only. CP6/14 also included a draft rule that clarified the PRA’s position and expectations on the application of clawback.
The PRA received a number of responses to CP6/14, which have been taken into account by the PRA in formulating the final rule on clawback. PS7/14 sets out our response to feedback received from CP6/14 and the finalised rule on clawback that will come into force on 1 January 2015.
Policy Statement 7/14Clawback - CP6/14
This consultation paper sets out a proposal on extending the Remuneration Code [1] to require all Prudential Regulation Authority (PRA)-authorised firms to amend employment contracts to be able to apply clawback to vested variable remuneration on a group-wide basis.
Response
This consultation closed on 13 May 2014.
- The Remuneration Code (The Senior Management Arrangements, Systems and Controls (SYSC) 19A sourcebook of the PRA’s Handbook) sets out the standards that banks, building societies and designated investment firms have to meet when setting pay and bonus awards for their staff. It aims to ensure that firms’ remuneration practices are consistent with effective risk management. Any amendments will have no impact on the PRA’s existing approach to proportionality: Remuneration standards: the application of proportionality.