SNI Renumeration Policy

Introduction

The purpose of this Remuneration Policy is to set out how Finex LLP (“FINEX”) will provide remuneration in form and amount that is consistent with the FCA’s Remuneration Code as set out in SYSC 19, whilst being able to attract, motivate and maintain high-calibre employees.

It is a general requirement that a firm must establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote sound and effective risk management.  The Remuneration Code is concerned with the risks created by the way remuneration arrangements are structured and not with the amount of remuneration.

FINEX’s Remuneration Policy will be reviewed annually by the governing body to ensure that it remains consistent with the Remuneration Code Principles.  In addition, the Compliance Officer, as part of FINEX’s regulatory monitoring, will include a review of the implementation of this Policy by the firm.

The Remuneration Code is based around twelve Principles, some of which are applicable to the firm as a whole and some of which are relevant to ‘Remuneration Code staff’.  The latter includes staff engaged in control functions, risk takers and senior management.  The FCA has issued guidance on ‘risk takers’ and as a minimum would expect all persons performing a significant influence function to be part of a firm’s Remuneration Code staff.

FINEX has in place a record of its Remuneration Code staff which is maintained and monitored by the Compliance Officer.

Proportionality in application of the Remuneration Code

When establishing and applying remuneration policies for Remuneration Code staff a firm is permitted to apply a proportional approach in a way that is appropriate to the size and nature of a firm.

FINEX acts as an investment manager to professional clients and eligible counterparties.  As such and based upon the ‘General guidance on proportionality’ issued by the FCA, FINEX is a Proportionality tier 4 firm (“BIPRU Limited Licence Firm”)[1]. Finex LLP is classified as a Small Non-Interconnected firm.

Whilst appreciating the contribution that can be made by a remuneration committee, FINEX considers that such a body would not be proportionate given the size and non-complex nature of both its activities and organisation.  Instead, FINEX’s governing body undertakes this role.

In keeping with FINEX being a Proportionality tier 4 firm, a proportional approach will be adopted in respect of the twelve Remuneration Code Principles where deemed appropriate and where permitted.

FINEX’s variable remuneration arrangements

In determining the remuneration policy, the policy ensures that a competitive remuneration package for talent is maintained and benchmarked with other financial services firms operating a similar business model.

At all times the governing body’s decision will be determined by FINEX’s approach of the twelve Principles as set out below.

Principle 1: Risk management and risk tolerance

FINEX has a low to medium risk appetite.  The firm does not take own positions where its own capital would be at risk.  The firm’s core business is managing Funds and operating as a Regulatory Host.

Principle 2: Supporting business strategy, objectives, values and long-term interests of the firm

FINEX obtained FCA authorisation in February 2010.  The firm’s revenue depends upon the long term retention of, and growth of, its client base. This Remuneration Policy is in line with these values.

Principle 3: Avoiding conflicts of interest

The firm has developed, and maintains, a conflicts of interest policy in keeping with the requirements in SYSC 10.1[2].  As a consequence, FINEX is aware of the need to ensure that its Remuneration Policy will not give rise to any conflicts of interest.

Principle 4: Governance

There will be an annual review of the policy undertaken by FINEX’s Compliance Officer.

Principle 5: Control functions

FINEX retains a list of Code Staff and this is updated as necessary.  In setting remuneration levels, FINEX recognises the importance of attracting and retaining experienced staff that perform control functions.

Principle 6: Remuneration and capital

Under no circumstances will FINEX make any variable remuneration awards that would impact upon the firm’s capital base, either from the need to retain required regulatory capital or where the firm has identified the need to build its capital base. No guaranteed bonuses are awarded.

Principle 7: Exceptional government intervention

FINEX does not believe that it would be a beneficiary of exceptional government intervention and therefore this Principle will not be of relevance.

Principle 8: Profit-based measurement and risk adjustment

Financial performance is an important factor in the calculation of any variable remuneration (see also Principle 12).  The measurement of financial performance will be based principally on profits and not on revenue or turnover.  In those instances when the latter is used in assessment then FINEX will also take into account the quality of business undertaken or services provided and their appropriateness for clients.

In both performance measuring and the allocation of variable remuneration the governing body of FINEX will make qualitative judgements on, making due recourse to the firm’s current ICAAP and liquidity statement as necessary, current and future risks and the cost and quantity of capital and liquidity required.

Principle 9: Pension policy

FINEX has no pension plan.

Principle 10: Personal investment strategies

At times it is possible that one effect of aligning an individual’s remuneration with risk is that the remuneration may be subject to downside.  As this alignment is an important feature of the Remuneration Code, staff will not be permitted to use any personal hedging strategies or take out insurance contracts that would undermine this alignment.

Principle 11: Avoidance of the Remuneration Code

FINEX supports both the regulatory obligations and the ethics of Remuneration Code.  No variable remuneration awards will be paid through any vehicles or methods that would facilitate the avoidance of the Remuneration Code. All remuneration is paid through vehicles that facilitate adherence to Code and checked with an independent auditor.

Principle 12: Remuneration structures

At the heart of FINEX’s Remuneration Policy is the need to ensure that the structure of an employee’s remuneration is consistent with, and promotes, effective risk management.  As a Proportionality tier 4 firm FCA guidance on proportionality advises that four elements of Principle 12 can be disapplied. Given FINEX’s relatively small size and simple business model the firm will follow this guidance and disapply those elements. For the sake of completeness these will be referenced below as appropriate.

Where remuneration is performance-related then in addition to the performance of the individual FINEX will also take into account the performance of the business unit concerned and the overall results of the firm.  Performance assessment will not relate solely to financial criteria but will also include compliance with regulatory obligations and adherence to effective risk management.  In keeping with FINEX’s long term objectives, the assessment of performance will take into account longer-term performance and payment of any such performance related bonuses may need to be spread over more than one year to take account of the firm’s business cycle.

In the case of early termination of a contract any payments will reflect performance achieved over time; FINEX does not reward failure.

The firm does not award guaranteed variable remuneration.  As mentioned above, four elements of Principle 12 are disapplied in the case of FINEX.  These concern: the need to set an appropriate ratio between the fixed and variable components of total remuneration (Principle 12(d)); the need to ensure that at least 50% of any variable remuneration consists of shares or equivalent ownership interest (Principle 12(f)); the need to defer at least 40% of any variable remuneration over a period of not less than three to five years (Principle 12(g)); and the need for performance adjustment (Principle 12(h)).

Other

In determining and setting out this Remuneration Policy, FINEX has borne in mind that Principles 1 to 4, 8 to 10 and 12 (concerning payments related to early termination) are to be applied on a firm-wide basis.

This Remuneration Policy is formally approved and adopted by FINEX’s governing body which will have ultimate responsibility for its implementation.

[1] BIPRU Firms: https://www.handbook.fca.org.uk/handbook/SYSC/19C/3.pdf

[2] SYSC 10.1 https://www.handbook.fca.org.uk/handbook/SYSC/10/1.pdf