Q&As

Which financial institutions have to follow the obligations under the Prudential Regulation Authority's Remuneration Code to apply clawback provisions to bonus awards? Also what are the implications of a role being classified as Code Staff for the purposes of the PRA and FCA Remuneration Code (a material risk taker)?

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Published on LexisPSL on 03/11/2015

The following Financial Services Q&A provides comprehensive and up to date legal information covering:

  • Which financial institutions have to follow the obligations under the Prudential Regulation Authority's Remuneration Code to apply clawback provisions to bonus awards? Also what are the implications of a role being classified as Code Staff for the purposes of the PRA and FCA Remuneration Code (a material risk taker)?
  • The PRA/FCA dual-regulated firms Remuneration Code—who does it apply to?
  • Clawback and deferral provisions
  • Material risk takers
  • The implications of being defined as Code Staff

Which financial institutions have to follow the obligations under the Prudential Regulation Authority's Remuneration Code to apply clawback provisions to bonus awards? Also what are the implications of a role being classified as Code Staff for the purposes of the PRA and FCA Remuneration Code (a material risk taker)?

The PRA/FCA dual-regulated firms Remuneration Code—who does it apply to?

The clawback requirements of the Financial Conduct Authority/Prudential Regulation Authority (FCA/PRA) Remuneration Code (the 'Dual-Regulated firms Remuneration Code') affect:

  1. banks

  2. building societies

  3. PRA-designated investment firms (currently nine firms) (which are dual regulated)

  4. branches of non-EEA banks or building societies

Clawback and deferral provisions

The rules on deferral and claw-back will come into force for performance years starting on or after 1 January 2016. The final rules were jointly published by the FCA and PRA in June 2015 (see PS15/16).

  1. Senior Managers as defined under the Senior Managers Regime must apply deferral periods to variable remuneration awards of no less than seven years from the date of the award, with no vesting before the third anniversary of award, and vesting no faster than on a pro rata basis (PRA and FCA requirement).

  2. Risk managers must apply deferral periods of no less than five years to variable remuneration awards, with vesting no faster than pro rata from year one (PRA requirement).

  3. The FCA is introducing a rule to require a minimum

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