MIFIDPRU 8 Disclosure
The Financial Conduct Authority (“FCA” or “regulator”) in the Prudential sourcebook for MiFID Investment Firms in the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Marine Capital Limited (“MCL” or the “Firm”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Firm must comply, further to those prudential requirements.
MCL is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, the Firm is required by MIFIDPRU 8 to disclose information regarding its remuneration policy and practices.
The purpose of these disclosures is to give stakeholders and market participants an insight into the Firm’s culture and to assist stakeholders in making more informed decisions about their relationship with the Firm.
This document has been prepared by MCL in accordance with the requirements of MIFIDPRU 8 and is verified by the Governing Body. Unless otherwise stated, all figures are as at the Firm’s 30 April financial year-end.
Remuneration Policy and Practices
As an SNI MIFIDPRU Investment Firm, MCL is subject to the basic requirements of the MIFIDPRU Remuneration Code (as laid down in Chapter 19G of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). MCL, as an alternative investment fund manager, is also classified as a collective portfolio management investment firm, and as such, is also subject to the AIFM Remuneration Code (SYSC 19B).
The purpose of the remuneration requirements is to:
- Promote effective risk management in the long-term interests of the Firm and its clients;
- Ensure alignment between risk and individual reward;
- Support positive behaviours and healthy firm cultures; and
- Discourage behaviours that can lead to misconduct and poor customer outcomes.
The objective of MCL’s remuneration policies and practices is to establish, implement and maintain a culture that is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile of the Firm and the services that it provides to its clients.
In addition, MCL recognises that remuneration is a key component in how the Firm attracts, motivates, and retains quality staff and sustains consistently high levels of performance, productivity, and results. As such, the Firm’s remuneration philosophy is also grounded in the belief that its people are the most important asset and provide its greatest competitive advantage.
MCL is committed to excellence, teamwork, ethical behaviour, and the pursuit of exceptional outcomes for its clients. From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, attitude, and results.
Characteristics of the Firm’s Remuneration Policy and Practices
Remuneration at MCL is made up of fixed and variable components. Both components are set with a view to aligning the interests and risk profile of staff and the Firm while maintaining prudent financial management. The fixed component incorporates salary, pension and other benefits and market information is incorporated, where possible, to attract and retain skilled staff. Variable remuneration is in the form of a discretionary bonus and takes into consideration the Firm’s financial performance and the performance of the individual in contributing to the Firm’s success. The individual is assessed on both financial and non-financial criteria. All staff members are eligible to receive variable remuneration.
Discretionary bonus awards are based on a number of different factors, some of which are quantitative and others which are qualitative. The key quantitative criterion is the overall profitability of the firm. Qualitative measures relate to the overall performance of the individual and the extent to which they have met or exceeded agreed expectations based on their specific role. As individuals’ roles vary significantly, performance is assessed against the relevant set of criteria for each role.
The fixed and variable components of remuneration are appropriately balanced: the fixed component represents a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration. This allows for the possibility of paying no variable remuneration component, which the Firm would do in certain situations, such as where the Firm’s profitability performance is constrained, or where there is a risk that the Firm may not be able to meet its capital or liquidity regulatory requirements.
Governance and Oversight
The Board of Directors is responsible for setting and overseeing the implementation of MCL’s remuneration policy and practices. In order to fulfil its responsibilities, the Board of Directors:
- Is appropriately staffed to enable it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital, and liquidity.
- Prepares decisions regarding remuneration, including decisions that have implications for the risk and risk management of the Firm.
- Ensures that the Firm’s remuneration policy and practices take into account the public interest and the long-term interests of shareholders, investors, and other stakeholders in the Firm.
- Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Firm and of its clients.
MCL’s remuneration policy and practices are reviewed annually by the Board of Directors. Given the size and complexity of the Firm, there is not a separate Committee that is responsible for remuneration.
Quantitative Remuneration Disclosure
For the financial year e.g., 1 April 2022 to 31 April 2023, the total amount of remuneration awarded to all staff in MCL’s employment as at 30 April 2023 was £437,928, of which £407,928 comprised the fixed component of remuneration, and £30,000 comprised the variable component. For these purposes, ‘staff’ is defined broadly, and includes, for example, employees of the Firm itself, directors, partners or members, officers (whether full or part-time), and contractors who undertake roles on behalf of the firm.