Image2On 15 July 2022, the Prudential Regulation Authority (the “PRA”) published the Consultation Paper 8/22 (the “CP8/22”) proposing its expectations in relation to the instruments or claims which relate to unvested deferred sums awarded to Material Risk Takers (the “MRTs”) as a part of their variable pay. Particularly, the PRA considers cases whereby a change is prompted by the need to manage a conflict of interest arising from an MRT seeking a senior public appointment linked to financial policy or financial services regulation. CP8/22 proposes that a new section is added to Chapter 4 of the Supervisory Statement 2/17 ‘Remuneration’ (Appendix 1) (the “SS2/17”) regarding certain new requirements and expectations of the PRA on remuneration payable to MRTs within the scope of SS2/17…

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The above changes aim to facilitate the appointment of senior and key business people to public roles, improve the expertise of the MRTs and provide firms with room for manoeuvre when determining the form of the awards they pay to MRTs.

The consultation period for the proposals and expectations of the PRA under CP8/22 has been finalised on 20 September 2022. Once the PRA finalises its proposed amendments, these will become effective as of 12 December 2022.

For more information, guidance, or advice on the remuneration regulations in the financial services sector and CP8/22 of the PRA, Cleveland & Co External in-house counsel™, your specialist outsourced legal team, are here to help.

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