On 23 July 2021, the Prudential Regulation Authority (PRA) published a direction for modification by consent concerning the Remuneration Part of the PRA Rulebook relating to the identification of individuals as material risk takers (MRTs). It has also published guidelines on the modification, in addition to updating its webpage on waivers and modifications.
Article 7 of the Material Risk Takers Regulation requires a firm to identify MRTs and rule 3.1 of the Remuneration Part of the PRA Rulebook sets out rules that apply to this category of individual. Article 7 also provides for the exclusion of employees from categorisation as an MRT, where the employee meets the pay-based criteria but is deemed not to have a material impact on the firm’s risk profile.
The modification states that for the purposes of rule 3.1, the persons identified in a letter from the PRA to the firm are not MRTs in respect of a specified performance year. Where granted, the modification has effect in respect of the relevant performance year but must be renewed each year.
To view the PRA direction, please click here.