21 July 2021 update: The PRA published ‘PS18/21 ‘Remuneration: Correction to the definition of ‘higher paid material risk taker’ to align the ‘higher paid material risk taker’ definition in the PRA Rulebook with the PRA’s intentions. All changes outlined in this PS will take effect from Friday 23 July 2021, however firms would not be required to apply the corrected definition to remuneration that has been paid, vested, or is subject to an obligation to pay or vest created before this date.
Published on
25 February 2021
Please note: Due to the short nature of this statement, we have presented the text on this webpage, without a separate document. You can use the ‘Convert this page to PDF’ button below to create a copy.
The PRA has identified that there is an error in the ‘higher paid material risk taker’ definition in Rule 1.3 in the Remuneration Part of the PRA Rulebook, introduced as part of the PRA’s implementation of Capital Requirements Directive V (CRD V).
The ‘higher paid material risk taker’ definition currently sets the requirement that an individual would be treated as a ‘higher paid material risk taker’ when:
(a) their annual variable remuneration exceeds 33% of their total remuneration; and
(b) their total remuneration exceeds £500,000.
We have identified that this is an error. An individual should instead be treated as a ‘higher paid material risk taker’ where either condition (a) or (b) is satisfied. This is in line with the PRA’s position outlined in Consultation Paper 12/20 Capital Requirements Directive V (CRD V) and Policy Statement 26/20 Capital Requirements Directive V (CRD V).
As the error in the rule has been identified, we intend to consult on amending the rule at the earliest opportunity. In the meantime, we expect firms to treat individuals as ‘higher paid material risk takers’ where either condition (a) or (b) has been satisfied.
The FCA is aware of the PRA's position on the definition of the term 'higher paid material risk taker' and, in order to maintain alignment, the FCA intends to consult on amending this rule at the next suitable opportunity.