Remuneration policies for Solvency II firms
The Prudential Regulation Authority has now published its Policy Statement (PS22/16) and Supervisory Statement (SS10/16) on remuneration requirements for Solvency II firms.
The policy and supervisory statements follow the consultation paper (CP13/16) released in April of this year.
The policy statement is relevant to all Solvency II firms and all firms must ensure they are compliant with Article 275 of the Solvency II regulations (the principles for a firms written remuneration policy).
The supervisory statement provides guidance for significant (category 1 and 2) Solvency II firms in complying with Article 275. The guidance is as per CP13/16 but with additional clarity on certain points.
Although the minimum expectations set out in the supervisory statement are not applicable to smaller firms (category 3 to 5), it may be used as a guide by these firms when reviewing their remuneration policies.The PRA still expects smaller firms to comply appropriately and proportionately with Article 275 when setting remuneration policies. Smaller firms should be exercising appropriate judgement to ensure that the specific arrangements for Solvency II staff contained in Article 275(2) are applied proportionately and modified where required to reflect the size and nature of the business.