The UK Prudential Regulation Authority (PRA) updated their Remuneration Policy Statement (RPS) template for reporting under Solvency II earlier this year. The RPS has a reporting deadline of 31 July, so firms caught should make sure to use the new template or comply with the level of detail required through alternate reporting.
The Commission Delegated Regulation (EU) 2015/35 contains the remuneration rules applicable to insurance and re-insurance undertakings regulated in the EU.
On 1 January 2016 the remuneration requirements in the Delegated Regulation became directly applicable to Solvency II firms, with national authorities expected to ensure firms are compliant. In the UK, the PRA categorises firms into 5 categories depending on their impact of risk and likelihood to disrupt the interests of policyholders. The PRA's category 1 and 2 firms must be able to demonstrate compliance with the remuneration requirements. To assist firms in demonstrating compliance, the PRA designed a Remuneration Policy Statement (RPS) which has recently been updated.
Although the template is intended to help firms meet the PRA's expectation of the level of detail required, use of the template is voluntary and firms may document how their remuneration policies comply with the Solvency II remuneration requirements in a different way.
On 9 May 2019, the PRA published updated versions of its:
- Remuneration Policy Statement reporting template for PRA category 1 and 2 firms for the 2018 performance year - this template sets out the details required to demonstrate compliance; and
- Identified Staff Table (RPS Table 1) - this table sets out information on those individuals whose activities may have a material impact on the risk profile of the Solvency II firm.
Although there are no material changes against the previous RPS template, it is important to note that the PRA has asked firms in scope to submit their RPS (or equivalent method of compliance) to the Bank of England Electronic Data Submission (BEEDS) portal as an occasional submission by 31 July 2019.
There are also no material changes to the Identified Staff Table. However, the table now refers to the Senior Managers & Certification Regime expansion which was applicable to insurers from December 2018 and will be relevant for 2019 performance year reporting. Firms must submit their completed Solvency II Identified Staff Table alongside the RPS.
PRA-regulated Solvency II firms in scope have been asked to submit a copy of their RPS to BEEDS by 31 July 2019. Firms should prepare this information as soon as possible to meet the deadline.
Any category 1 and 2 firms which do not intend to use the updated template should ensure the documentation submitted for recording remuneration policies, practices and procedures is in line with the Solvency II requirements.
Tapestry has significant experience advising financial services firms on their remuneration compliance. If you would like to discuss your compliance with us, please do contact us.