UK Prudential Regulation Authority Identifies Error in "Higher Paid Material Risk Taker" Definition
02/25/2021The U.K. Prudential Regulation Authority has identified an error in the definition of "Higher Paid Material Risk Taker" within Rule 1.3 of the Remuneration Part of the PRA Rulebook, implementing part of the EU's Fifth Capital Requirements Directive in U.K. laws before the end of the Brexit transitional period. The definition currently requires an individual to 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. Instead, an individual should be treated as a Higher Paid Material Risk Taker when either condition (a) or (b) are satisfied.
The PRA and U.K. Financial Conduct Authority plan to consult on amending the rule at the earliest opportunity but, in the meantime, firms should adopt the approach that either (a) or (b) will qualify an individual as a Higher Paid Material Risk Taker.
The PRA published its final Policy Statement setting out the rules final rules for the U.K.'s implementation of CRD5 in December 2020.
View the PRA's statement on Higher Paid Material Risk Takers.
View details of the U.K. implementation of CRD V.
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