The UK Prudential Regulation Authority (PRA) has published its 2019/20 Business Plan, outlining the PRA’s strategic goals and the workplan that they intend to implement over the coming year to achieve these goals. In addition to a range of strategic goals, including those relating to financial and operational resilience, competition and Brexit, the PRA will focus on robust prudential standards and supervision.
This focus on robust prudential standards and supervision will impact the regulation and supervision of remuneration within banks and insurers. The PRA has stated that they will move from developing and implementing new policies to embedding and evaluating them, including embedding and evaluating effective governance regimes and accountability. As part of this change in focus, the PRA has stated that, in 2019/20, they will begin an evaluation of the effectiveness of the Senior Managers & Certification Regime and remuneration policies for banks and insurers. The PRA will also continue to review firms’ governance arrangements in areas such as remuneration practices, diversity, and corporate governance at board level.
Firms should read the Business Plan and each strategic goal identified to ensure they understand the PRA’s area of focus for the coming year. It will be encouraging for firms to see that the PRA is not concentrating on developing and implementing new policies, especially given that banking firms will already need to take action in relation to the upcoming remuneration changes driven by the Capital Requirements Directive V / Regulation II and the Investment Firms Directive / Regulation. Firms should, however, be aware that the focus on evaluation and embedding of existing governance and accountability regimes may lead to increased scrutiny by the PRA, or at least an increased focus on remuneration disclosures.
Tapestry has significant experience advising financial services firms on their remuneration compliance, particularly in relation to remuneration regulations. If you would like to discuss your remuneration compliance with us, please do contact us.