CP14/23 – Pillar 3 remuneration disclosure

On June 19, 2023, the Prudential Regulation Authority (PRA) released a new Consultation Paper (CP14/23), outlining its plans to „enhance“ the disclosure requirements for remuneration (compensation) under Pillar 3. Specifically, the PRA seeks to decrease the number of disclosures required by smaller banks and building societies, making their reporting and disclosure obligations more proportionate to their size.
This consultation follows earlier ones in February 2023 (CP4/23 and CP5/23) that addressed liquidity disclosure and other remuneration-related requirements of simpler-regime and small firms, respectively. CP14/23 now picks up on several of the proposed measures to establish a new comprehensive remuneration disclosure framework for just such smaller firms.
According to the PRA, in-scope firms of the here proposed requirements would be the following:
– ‘Simpler-regime firms’ under the proposed Strong and Simple Framework.
– Firms that would be ‘small CRR firms’ under the PRA’s CP5/23 proposals on remuneration.
– Small and non-complex institutions that would not be simpler-regime firms but will be eligible to be small CRR firms.

Specifically, the PRA proposes to establish the following disclosure requirements of in-scope firms:
Simpler-regime firms which – pursuant to CP5/22 – would be firms with limited asset sizes, limited trading activity, using the Standardized Approach (SA) for evaluation credit risk, and meeting several other criteria (see EventID 15882): These firms would be required to disclose parts of the UK REMA template (a through d) and the UK REM 1 template so long as they are listed firms. Those that are not listed would be exempt from remuneration disclosure requirements altogether.
Small CRR firms which – pursuant to CP5/23 – would be small, non-systemically important institutions focused on deposit-taking and lending in UK which do not exceed certain asset size thresholds (see EventID 19879): Such firms would also be required to disclose parts of the UK REMA template (a through d) and the UK REM 1 template so long as they are listed firms. Those that are not listed would be exempt from remuneration disclosure requirements altogether.
SNCI transitional firms which – pursuant to same CP5/23 – would be small and non-complex institutions (SNCI) that are not simpler-regime firms and that would qualify as „other institutions“ in accordance with Article 433c of the Disclosure (CRR) Part of the PRA rulebook as they will be eligible to be „small CRR firms“ regime: Such firms would also be required to disclose parts of the UK REMA template (a through d) and the UK REM 1 template so long as they are listed firms. Those that are not listed would be exempt from remuneration disclosure requirements altogether.
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The current „UK REM 1 template“ and „UK REMA (Race Equality and Minority Achievement) template on remuneration disclosures may be found here.