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Wealthify Limited 2021 Pillar 3 and Remuneration Code Disclosure
FCA Reference Number: 662530
The European Union’s Capital Requirements Directive (“CRD”) came into effect on 1 January 2007 and introduced a set of regulatory capital adequacy standards and associated supervisory framework across the European Union. Within the United Kingdom, this is governed by the Financial Conduct Authority (“FCA”) in its regulations through the General Prudential Sourcebook (“GENPRU”) and the Prudential Sourcebook for Banks, Building Societies and Investment firms (“BIPRU”).
The CRD framework consists of a three “Pillar” approach:
The requirements for Pillar 3 disclosures are detailed in the FCA Handbook of Rules and Guidance under BIPRU 11.
The rules in BIPRU 11 provide that a firm may omit one or more of the required disclosures if it believes that the information is immaterial. Materiality is based on the criteria that the omission or misstatement of material information would be likely to change or influence the assessment or decision of a user relying on that information for the purposes of making economic decisions.
The firm is also permitted to omit one or more of the required disclosures where it’s believed that the information is regarded as proprietary or confidential. Proprietary information is that which, if it were shared, would undermine the firm’s competitive position. Information is considered to be confidential where there are obligations binding the firm to confidentiality with its clients and counterparties.
If Wealthify have omitted information for any of the above reasons, a statement explaining this will be provided in the relevant section.
The Pillar 3 disclosure will be reviewed on an annual basis as a minimum. The disclosures will be published as soon as is practical following the finalisation of the ICAAP and the publication of our annual reports. The information contained in this disclosure has not been audited by our external auditors and does not constitute any form of financial statement.
All figures contained in this disclosure are based on our Board approved ICAAP report of 29th November 2021.
3. Firm Profile
Wealthify Limited (“Wealthify”) is a wholly owned subsidiary of Wealthify Group Limited. Wealthify provides discretionary investment management services and is authorised and regulated by the FCA and is categorised as a limited license firm for capital adequacy purposes.
Aviva Group Holdings Limited is the 100% shareholder of Wealthify Group Limited.
4. Risk Management
Wealthify is governed by its directors who determine its business strategy and risk appetite. They are also responsible for establishing and maintaining the governance arrangements along with designing and implementing a risk management framework that recognises the risks that our business faces.
The directors also determine how the business risks may be mitigated and continually assess the arrangements to manage those risks. The Board of directors meet on a regular basis and discuss current projections for profitability, cash flow, regulatory capital management, and business planning and risk management.
They manage Wealthify’s risks though a framework of policy and procedures having regard to relevant laws, standards, principles and rules (including principles and rules of the FCA) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.
Areas of risk to which Wealthify are exposed include credit risk, market risk, operational risk and liquidity risk.
5. Capital Resources
5.1 Pillar 1
In accordance with the FCA handbook GENPRU 2.1.45R, which provides the calculation of variable capital requirement for a BIPRU firm, our capital requirement has been determined as being our fixed overhead requirement and not the sum of our credit risk capital requirement and our market risk capital requirement.
The Pillar 1 capital requirement for Weathify is £1,279,750.
5.2 Pillar 2
The capital required under Pillar 2 is capital held to cover risks not considered within Pillar 1.
Wealthify’s overall approach to assessing the adequacy of its internal capital is set out in its ICAAP. The ICAAP involves consideration of a range of risks we face and determines the level of capital needed to cover such risks.
The level of capital required to cover identified risks is a function of their impact and probability and risk mitigation controls in place. Wealthify’s Pillar 2 capital requirement, which is our own assessment of the minimum amount of capital that we believe is adequate against the risks identified, has been assessed as lower than our Pillar 1 requirement. There is a considerable surplus of reserves above the capital resource requirement deemed necessary to cover the risks identified.
Stress and scenario tests performed during the ICAAP support management’s view that adequate capital is held by the firm under Pillar 2.
5.3 Regulatory Capital
Wealthify’s capital resources for regulatory purposes vs the ICAAP capital requirement is confirmed below:
Total Tier 1 and Tier 2 capital resources, net of deductions
Pillar 1 capital requirement
Pillar 2 capital requirement
6. Remuneration Code Disclosure
The objective of the FCA’s Remuneration Codes is to ensure that all regulated firms have risk-focussed remuneration policies which are consistent with and promote effective risk management and do not expose the firms to excessive risk.