The FCA and PRA have now both published their Consultation Papers on the implementation of the remuneration provisions of the revised Capital Requirements Directive (referred to as CRD5), which will apply in the UK and the EU from 29 December 2020.
As anticipated, both consultations confirm that the FCA and PRA intend for the UK's remuneration regime to closely follow the EU CRD5 regime both upon implementation and following the end of the Brexit transitional period on 31 December 2020.
The UK implementation of CRD5 will impact on the remuneration provisions which apply to banks, building societies and a limited number of large investment firms (systemically important investment firms which are re-classified as "Credit Institutions" or other large investment firms to which the CRD prudential regime will apply), for remuneration paid in respect of performance years starting on or after 29 December 2020. The changes will be particularly significant for banks that currently fall within the PRA/FCA's Proportionality Level Three.
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