Regulatory Disclosures

Regulatory Disclosures

 

Castlefield Investment Partners LLP

Pillar 3 Disclosure and Policy

Our Pillar 3 disclosure as required by BIPRU 11.3.3 R is set out below. Pillar 3 disclosures will be made annually in our Audited Annual Accounts and/or via our web site (www.castlefield.com).

 

BIPRU 11.5 Technical criteria on disclosure: General requirements

Background

Castlefield Investment Partners LLP (‘the Firm’) is authorised and regulated by the UK Financial Conduct Authority (“FCA”) as an Investment Management Firm and as such is classified as a “Limited Licence” “BIPRU €50K” firm subject to the capital adequacy rules set out in the FCA’s BIPRU sourcebook.

The capital adequacy framework consists of three Pillars:

  • Pillar 1 sets out the minimum capital amount that meets the Firm’s credit, market and operational risk;
  • Pillar 2 requires the Firm to assess whether its Pillar 1 capital is adequate to meet its risks and is subject to annual review by the FCA (the ICAAP as set out below); and
  • Pillar 3 requires disclosure of specified information about the underlying risk management controls, capital position and remuneration. This document is Castlefield’s Pillar 3 disclosure statement.

 

BIPRU 11.5.1

Disclosure: Risk Management Objectives and Policies 

 

Governance Framework

John Eckersley, Mark Elliott and parent company, CPL, are the Designated Members of CIP. John acts as the Managing Partner of the LLP and as its Chief Executive Officer, from an FCA perspective. In this capacity, he chairs a regular meeting of its Ordinary Members, who in turn are deemed by FCA to be its Partners. This is the body of the firm which exercises daily oversight of its activities, in conjunction with the Group’s Head of Finance. The Designated Members are the Governing Body of the Firm and each is considered to be a Senior Manager, as defined by the rules relating to the Senior Managers and Certification Regime. The full list of Members/Partners is:

  • John Eckersley – Designated Member, Voting Member, Managing Partner
  • Mark Elliott – *Designated Member, Voting Member, Partner
  • Castlefield Partners Limited – Designated Member, Voting Member
  • David Elton – Ordinary Member, Partner
  • Rory Hammerson – Ordinary Member, Partner
  • Simon Holman – Ordinary Member, Partner
  • John Alexander – **Ordinary Member, Partner

(* M Elliott transitioned from Ordinary Member to Designated Member and **J Alexander became an Ordinary Member of the LLP post the end of the reporting period – 31st August 2021. The information above provides the current status of all LLP members)

Risk Framework

Risk within the Firm is managed through embedded policies and procedures, including FCA principles and rules. Regular reviews to monitor risks are carried out and reported to the Risk Committee.

Risk Committee

Consisting of the Managing Partner, Head of Investment Management, Head of Risk & Compliance, Head of Finance and other Senior Management Functions from across the Castlefield group. The committee sits three times a year and will review the Risk Register for new and emerging risks as well as assessing current mitigation strategies.

Compliance Reporting

Compliance oversight reports are completed on a quarterly basis by the Head of Risk & Compliance. These reports are presented to the management team for consideration and action as appropriate at the Partners meetings

Money Laundering Risk Assessment

The MLRO will use this assessment to drive the necessary anti-money laundering and anti-financial crime initiatives within the firm.

 

Executive Committee

Is responsible for advising the Managing Partner on all aspects of group strategy and monitors operational performance.  Committee members comprise Heads of operational areas, including Risk & Compliance and Finance. It is served by the Partnership Secretary.

BIPRU 11.5.4

Disclosure: Compliance with BIPRU 3, BIPRU 4, BIPRU 6, BIPRU 7, BIPRU 10 and the Overall Pillar 2 Rule

BIPRU 3

For its Pillar 1 regulatory capital calculation of Credit Risk the Firm has adopted the Standardised Approach (BIPRU 3.4) and the Simplified Method of calculating risk weights (BIPRU 3.5). 

Credit risk calculation

Credit Risk Capital Requirement

Rule

Exposure

£

Weighting

Risk Weighted Exposure

£

Credit risk capital component

BIPRU 3.2

0

 

 

Counterparty risk capital component

BIPRU 13 & 14

0

 

 

Concentration risk capital component

BIPRU 10

0

 

 

Total

 

0

 

 

Pershing deposit

BIPRU 3.4.45

30k

100%

30k

Banks

BIPRU 3.4.44

871k

20%

174k

Debtors

BIPRU 3.4.129

494k

100%

494k

Investments

BIPRU 3.4.96

0k

100%

0k

Tangible Assets (Fixed assets)

BIPRU 3.4.127

0k

100%

0k

Total

 

1,395k

 

698k

Credit risk capital component

8% of risk weighted exposure

 

 

56k

 

BIPRU 11.5.5

This disclosure is not required as the Firm has not adopted the Internal Ratings Based approach to Credit Risk and therefore is not affected by BIPRU 11.5.4R (3).

 

BIPRU 11.5.6

This disclosure is not required as the Firm has not adopted the Internal Ratings Based approach to Credit Risk and therefore is not affected by BIPRU 11.5.4R (3).

 

BIPRU 11.5.7

This disclosure is not required as the Firm does not have a Trading Book.

 

BIPRU 11.5.9

This disclosure is not required as the Firm does not make Value Adjustments and Provisions for Impaired Exposures that need to be disclosed under BIPRU 11.5.8R (9)

 

BIPRU 11.5.10

Disclosure: Firms calculating Risk Weighted Exposure Amounts in accordance with the Standardised Approach

This disclosure is not required as the Firm uses the Simplified method of calculating Risk Weights (BIPRU 3.5).

 

BIPRU 11.5.11

Disclosure: Firms calculating Risk Weighted Exposure amounts using the IRB Approach. 

This disclosure is not required as the Firm has not adopted the Internal Ratings Based approach to Credit and therefore is not affected by BIPRU 11.5.4R (3).

 

BIPRU 11.5.13

Disclosure: Use of VaR model for calculation of Market Risk Capital Requirement

This disclosure is not required as the Firm is not exposed to market risk.

 

BIPRU 11.5.14

Disclosure: Operational Risk

This disclosure is not required as a Pillar 1 Operational Risk calculation is not required under GENPRU 2.1.45R. We are disclosing the Fixed Overhead Requirement (FOR) as a proxy for the Pillar 1 Operational Risk calculation.

Fixed Overhead Requirement

GENPRU 2.1.53

£ 279k

 

BIPRU 11.5.15

Disclosure: Non-Trading Book Exposures in Equities

This disclosure is not required as the Firm does not have a Non-Trading Book Exposure to Equities.

 

BIPRU 11.5.16

Disclosures: Exposures to Interest Rate Risk in the Non-Trading Book

Although the Firm has relatively significant cash balances on its Balance Sheet, there is currently no significant exposure to Interest Rate fluctuations.

 

BIPRU 11.5.17

Disclosures: Securitisation

This disclosure is not required as the firm does not securitise its assets.

 

CIP is an Investment Management Firm.  Its greatest risks are therefore business and operational risk. We have assessed business risks in our ICAAP and set out appropriate actions to manage them. We have modelled the effect on our capital planning forecasts and cash requirements of scenarios in which funds under management remain flat instead of increasing in line with our business plan and a further scenario in which there is a downturn in the market equivalent to 25% from which there is no recovery. Our aim is to ensure that in such conditions we have sufficient regulatory capital. The modelling shows that our regulatory capital would be adequate but actions we would consider include reducing costs as appropriate and seeking additional capital from the members of CIP. Of particular relevance is the fact that each of the working members (Partners) has, by way of formal Members’ Agreement, agreed to reduce their fixed prior charge over profits in the event that the business does not generate sufficient profits to cover the amounts concerned. The parent company, Castlefield Partners Limited, has expressed itself willing and has the resources to provide financial support, although, in accordance with FCA guidance, our analysis does not imply reliance on this type of external shareholder support. Any such investment would be part of a medium-term plan, rather than a short term ‘fix’. The Firm’s exposure to credit risk is the risk that management fees and/or advisory fees cannot be collected and therefore credit risk is low. The Firm holds all cash balances with banks which are assigned high credit ratings.

All data is as at 31 August 2021 being the Firm’s year end, except for the Capital Resources, which is as at 30 November 2021. This information was published, following update, approval and publication of the latest ICAAP, on 17 December 2021.

 

BIPRU 11.5.18

Disclosures: Remuneration Policy

In accordance with the FCA’s Remuneration Code, the following represents a summary of the Firm’s formal Remuneration Policy. It is subject to annual review during December, updated and republished. It was most recently published on the date shown below.

The Firm has seven Code Staff, consisting of individuals identified as material risk takers and/or those holding Senior Manager responsibilities - five of them are working members of Castlefield Investment Partners LLP (described as a Partner). The other two individuals, Ms Hanlon and Mr Richardson, are captured by the Code in their capacity as Senior Managers with prescribed responsibilities.

Bonus Scheme One: There are five members of this scheme, each of whom is a member of the LLP. Each of these working Partners/members has an agreed, fixed prior share of the profits of the LLP (where such profits exist). The share of the four Ordinary Members (Messrs Elliott, Elton, Hammerson and Holman) is determined by the Managing Partner (Mr Eckersley), who is also one of two Designated Members of the LLP (the other being the Group holding company, Castlefield Partners Limited). The profit share of Mr Eckersley must be agreed by Castlefield Partners Limited (CPL). CIP LLP is effectively controlled by CPL. The directors of CPL are Mr Eckersley, BCF Capital Limited and Piccadilly Trustee Limited and they serve in this capacity at the discretion of the shareholders of CPL – the main external one being the Burdens’ Charitable Foundation.

Beyond the fixed remuneration each working member/Partner of the LLP receives, each is entitled to a share of 20% of the residual profits of the LLP, after account is taken of the prior charge on profits represented by fixed prior share of profits. This 20% forms a bonus pool, to be distributed amongst the members, at the discretion of the Designated Members pro-rata to their fixed profit shares. The variable element of remuneration received by each was 29-33% (2020: 26%).  On 1 September 2021, a new ordinary member was admitted to the LLP and in November 2021 Mr Elliott  was approved as an additional Designated Member. For 2021/22, the variable element of remuneration received by each member is projected to be 24%. The actual percentage may vary depending on the profits for the year but this does not alter the firm’s strategy, which remains that of managing money in a responsible and ethical way.  The partners will only take their variable profit share once these costs have been met.

Each of the working members of the LLP is also a shareholder in the holding company (CPL) and each has generally paid for their stake in this business. Each member caught by the Code is therefore focused not only on short term reward (which is predominantly of a fixed nature) but also on long term shareholder value creation.

Bonus Scheme Two: All Partners and Associates in the Castlefield group who are not in client facing roles and therefore in some cases eligible for target-based remuneration, are eligible for a modest bonus from CPL based on responsibility levels and performance. Mr Eckersley, Mr Richardson and Ms Hanlon are eligible under this scheme, although any bonus paid is in respect of their work for the group holding company.  The bonus is calculated as a percentage of salary without reference to profit. It is discretionary, does not exceed 15% of total remuneration and is paid only if the firm has enough regulatory capital.

 

Executive Incentive Scheme 1: This applies to Mr Eckersley, as a director of CPL and is overseen by the CPL Board. Apart from the remuneration he derives as a member of CIP LLP, Mr Eckersley receives additional fixed remuneration, including pension contributions of 5% of qualifying earnings, in his capacity as a director of CPL (the non-regulated holding company of the group) and is eligible to join the Castlefield Share Incentive Plan. He is theoretically entitled to a discretionary bonus determined by the CPL Board with reference to external market analysis and the performance of the business, compared to pre-agreed targets. No bonus was paid in respect of 2020-21 and it is assumed that there will be no bonus due in respect of 2021-22. Taking account of both CIP and CPL remuneration, Mr Eckersley receives 79% fixed remuneration. He receives 71% fixed remuneration from CIP (the entity caught by the Remuneration Code).

His main long-term incentive comes via his interest in the equity capital of the group holding company, CPL.

 

Executive Incentive Scheme 2: This applies to Mr Eckersley, Ms Hanlon and Mr Richardson. All are employed by CPL and receive a fixed salary, including pension contributions of 5% of qualifying earnings in respect of their group-wide roles. All have an interest in the equity capital of the holding company and are entitled to join the Castlefield Share Incentive Plan. Their shareholding represents their main long-term incentive.

In addition, all of Mr Eckersley, Mr Richardson and Ms Hanlon as employees of CPL, are eligible to receive a share of any flat rate bonus payment based on the results of the year ended 31 August 2021. This bonus is approximately £1,000 and is therefore immaterial in this context.

In summary, the Firm steers clear of large elements of variable remuneration, whilst paying what is believed to be fair fixed remuneration. Equity ownership amongst all colleagues is encouraged. There is no direct link between any one person’s remuneration and products sold or promoted to clients and/or potential clients. We have stressed a team approach to clients within CIP LLP.

The Firm’s detailed Remuneration Policy was approved for publication on 3rd December 2021 and updated in March 2022 to reflect the changes in Senior Manager appointments and was accordingly subsequently published via this web site.

 

ConBrio Partners Limited

UK UCITS Management Company

In accordance with the FCA’s Remuneration Code, the following represents a summary of the Company’s formal Remuneration Policy. The Policy is subject to annual review, amended and republished.

The Company has five Code Staff, three of whom are directors of the Company and therefore Senior Managers with prescribed responsibilities. The other individuals are captured by the Code in their capacity as SMF16 or MLRO for the Company.

Remuneration Scheme applying to those employed to work for the UCITS: This applies to Mr Slattery-Vickers, who is a director and receives fixed remuneration plus pension contributions of 5% of qualifying earnings from Castlefield Partners Limited, the group holding company, for his work in the Company. Ms Hanlon holds a group wide role and receives fixed remuneration plus pension contributions of 5% of qualifying earnings from Castlefield Partners Limited for her role as Head of Risk & Compliance and Mr Eckersley and Ms Holland also hold group-wide roles so their remuneration is for their role across the group as is Mr Richardson’s. They receive fixed remuneration, including pension contributions of 5% of qualifying earnings, in respect of their Senior Manager roles, including prescribed responsibilities. None of the Code staff receives remuneration directly from, or as a result of, the activities of the ACD. No variable remuneration is envisaged for Code staff in respect of their ACD activities.

Mr Eckersley also receives fixed and variable remuneration as a designated member of Castlefield Investment Partners LLP (‘CIP’), which is itself covered by the BIPRU Remuneration Code. The variable element of his remuneration from CIP is 29% for the year ended 31 August 2021. When the remuneration from CPL is taken into consideration, the variable element falls to 21%. The profit share of Mr Eckersley must be agreed by Castlefield Partners Limited (CPL). Like CFP, CIP is effectively controlled by CPL. The directors of CPL are Mr Eckersley, BCF Capital Limited and Piccadilly Trustee Limited and they serve in this capacity at the discretion of the shareholders of CPL – the main external one being the Burdens’ Charitable Foundation.

All code staff have an interest in the equity capital of the holding company and are eligible to join the Castlefield Share Incentive plan. The shareholding represents their main long-term incentive.

Bonus Scheme: Assuming profit levels are in line with budget or exceed budget, all Partners and Associates in the Castlefield group who are not in client facing roles and therefore in some cases eligible for target-based remuneration, are eligible for a modest bonus from CPL based on responsibility levels and performance. Mr Eckersley, Mr Richardson and Ms Hanlon are eligible under this scheme.  The bonus is calculated as a percentage of salary without reference to profit. It is discretionary, does not exceed 15% of total remuneration and is paid only if the firm has enough regulatory capital.

 

 

Executive Incentive Scheme 1: This applies to Mr Eckersley, as a director of CPL and is overseen by the CPL Board. He is also eligible to join the Castlefield Share Incentive Plan. Apart from the remuneration noted above from CPL and CIP, he is theoretically entitled to a discretionary bonus determined by the CPL board with reference to external market analysis and the performance of the business, compared to pre-agreed targets. No bonus was paid in respect of 2020-21 and it is assumed that there will be no bonus due in respect of 2021-22.

In addition, all Code staff are eligible to receive a share of any flat rate bonus payment based on the results of the year ended 31 August 2021. This bonus is approximately £1,000 and is therefore immaterial in this context.

In summary, the Company avoids basing rewards on variable remuneration but pays what is believed to be fair fixed remuneration. Equity ownership amongst all colleagues, not only Code staff, is encouraged. Each individual caught by the Code is therefore focused not only on short term reward (which is predominantly of a fixed nature) but also on long term shareholder value creation.

The Company’s detailed Remuneration Policy was approved for publication on 2nd  December 2021 and updated in March 2022 to reflect the change in MLRO and was accordingly subsequently published via this web site.