SL Investment Management Disclosure for Capital Adequacy as at 31 December 2020
This disclosure is in accordance with the Pillar 3 requirements and is set out herewith. It aims to enhance transparency in the UK financial markets by setting the minimum requirements for the public disclosure of information on the risk management practices and capital adequacy of SL Investment Management.
Please do not rely solely on the information. It is an introduction to SL Investment Management’s risk management practices and has been compiled in line with the minimum disclosure requirements. The information on the disclosure report is not audited and is updated annually.
The Capital Requirements Directive (‘CRD’) is a European Union directive which establishes a supervisory framework to reflect the Basel II and Basel III rules governing the quantity and quality of capital that banks, building societies and investment firms must maintain. The CRD was implemented in the UK by the Financial Conduct Authority (‘FCA’). SL Investment Management Limited (‘SL’) is subject to CRD III, which 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
- Pillar 3 requires disclosure of specified information about the underlying risk management controls, capital position and remuneration arrangements.
SL is authorised and regulated by the FCA and is a full scope Alternative Investment Fund Manager (‘AIFM’), primarily acting as a manager to Alternative Investment Funds (‘AIFs’). Disclosures will be made annually unless the SL Board deem it necessary to disclose more frequently. Because of the permission base for SL and the fact it does not have permission to hold client money or safe custody assets (CASS classification), the Prudential Sourcebook for Banks, Building Societies and Investments Firms (‘BIPRU’) is followed and not the Prudential Sourcebook for Investment Firms (‘IFPRU’). The rules of BIPRU chapter 11 set out the scope and obligations of the Pillar 3 disclosure and this document intends to meet these obligations.
SL has adequate capital for the size and complexity of the business. In order to reflect the risks it is exposed to SL will maintain capital of 25% of fixed overheads together with a retention to reflect some business risks. This is represented by Tier 1 capital (i.e. reserves in bank and paid up share capital).
SL is committed to taking risks which are commensurate to the potential returns but only where such risks do not jeopardise the stability and profitability of the core business.
Risk Management Objective and Policies
SL is committed to operating in a prudent manner using foresight and circumspection. SL has a robust risk management framework allowing the identification and mitigation of key business, operational, strategic and regulatory risks. The Risk Management function is an integral part of the business and is intended to provide comprehensive controls over the risks that are present to the business. The Risk Committee meets periodically to review the key risks and assess the effectiveness of the controls in place.
SL may omit certain disclosures from this document if they are deemed not material.
Proprietary or Confidential
SL may omit certain risks from this disclosure if the information is proprietary or confidential.
SL will make this disclosure at least annually and more frequently if necessary.
Revenue is primarily generated from established fund clients and is typically paid on the completion of policies purchased by a fund or from recurring management and advisory service fees generated from existing and new clients and calculated as a percentage of assets under management or advice. Credit risk is deemed to be low due to the long standing and transparent nature of SL’s relationships with its fund clients, and there is no significant concentration of risk with any specific clients.
The SL Board is responsible for the company’s remuneration plans, policies and practices and for determining specific remuneration packages for the employees. The SL Board also maintains and periodically reviews a list of Code Staff to ensure that their remuneration structures are compliant with the FCA Remuneration Code.
The link between pay and performance is such that all employees receive a salary commensurate with the incumbent’s role, responsibilities and experience and with reference to competitive market rates within the sector. Variable remuneration consists of performance-related awards principally comprised of annual bonus awards. The awards are determined by the SL Board and ensure that the aggregate spend on compensation is directly linked to the company’s financial performance.
|Total Staff Remuneration||1,464|
|Total Fixed Remuneration||947|
|Total Variable Remuneration||517|
|Code Staff Total Remuneration||353|
|Code Staff Headcount||5|
As discussed above the firm is a Collective Portfolio Management Investment (‘CPMI’) Firm and as such its capital requirements are the higher of:
- €125,000 + 0.02% of AIF assets under management;
- The sum of the market & credit risk requirements; or
- The fixed overheads requirement (‘FOR’), 25% of SL’s operating expenses.
|Tier One||Capital Resources (£000)|
|Total Capital After Deductions||3,236|
|Total Tier One Capital After deductions||3,236|
|Core Tier One Capital||3,236|
|Permanent Share Capital||63|
|Share Premium Account||400|
SL did not have Tier 2 or Tier 3 capital or any related deductions.