The PRA's expectations on remuneration

Published on 28 September 2016

The PRA’s expectations on remuneration – CP33/16

In this consultation paper (CP), the Prudential Regulation Authority (PRA) proposes to create a unified supervisory statement (SS) on remuneration. This will draw together the PRA’s existing supervisory statements on proportionality, the application of malus and other elements of remuneration in relation to the Remuneration Part of the PRA Rulebook and set out additional expectations of firms.

This CP is relevant to all Capital Requirements Regulation (CRR) firms and third country CRR firms in relation to their activities carried on from an establishment in the United Kingdom.

Summary of Proposals

The policy proposals included in this CP are to:

• consolidate the three existing remuneration statements (Legacy Supervisory Statement (LSS) 8/13 ‘Remuneration Standards: the application of proportionality’, SS2/13 ‘PRA expectations regarding the application of malus to variable remuneration’ and SS27/15 ‘Remuneration’);
• confirm PRA expectations that firms adhere to requirements set out in the EBA guidelines from 1 January 2017; and
• provide additional guidance on:
  • The EBA Guidelines
  • Material risk takers (MRTs)
  • The application of malus and clawback to variable remuneration
  • Remuneration committees
  • Long Term Incentive Plans
  • Remuneration structures

The guidance on buy-outs should be read alongside PRA Policy Statement 26/16 ‘Buy-outs of variable remuneration’. This provides feedback on responses to CP2/16 ‘Buy-Outs of Variable Remuneration’ and includes final rules on buy-outs amending the Remuneration Part of the PRA Rulebook.

Firms remain subject to expectations in the existing supervisory statements (LSS8/13, SS2/13 and SS27/15) until the final statement is published.

Response

This consultation closes on Monday 28 November 2016.

Consultation Paper 33/16 Opens in a new window