Frequency, media, location and frequency of publication of Regulatory Disclosure

Pillar 3

 

The method of disclosure chosen for your pillar 3 should be carefully considered. The spirit of pillar 3 is that the disclosure should be publicly available and so making your disclosures available at the firm’s registered office or upon request would not meet regulators expectations.

 

You must publish your pillar 3 disclosures on an annual basis as a minimum; making disclosures as soon as practicable. It is for you to determine whether more frequent publication is necessary in the light of the characteristics of your firm’s business and the extent to which risk exposures or other factors are prone to rapid change.

 

You should determine the appropriate medium, location and means of verification to ensure that your pillar 3 disclosures are effective. To the degree feasible, all disclosures should be provided in one medium or location. If disclosures are not included in the financial statements, you need to include a note in the financial statements as to where they can be found. Equivalent disclosures made by your firm under accounting, listing or other requirements may be deemed to constitute compliance with pillar 3 requirements.

 

Disclosure in your financial statements is considered effective if they are filed on a public register, but such statements should be filed as soon as the information becomes available for disclosure. The other issue with filing financial via a public register is that once they are filed the disclosures are not normally updated until the following year.

 

Website disclosure is seen as the most practical as it means that it can be updated at any point during the year. However, firms may find that pillar 3 disclosures are not compatible with the purpose of their website, so P3 offers an alternative basis for making your disclosure.

 

Stewardship Code

 

 

This should be kept up to date in accordance with the firm's current policy and requirements of the code. This is not a pillar 3 requirement but in the UK firms are expected to disclose their policy on their website or if they do not have a website, in another accessible form.

 

Remuneration Code

 

From 1st January 2011, firms are required under pillar 3 to make certain disclosures in respect of their remuneration policy.

 

Where you use a web-site to make public your pillar 3 disclosures, there is an expectation that you will also include your remuneration disclosure there.

 

 

The FSA (FCA as of 1st April 2013) has provided a proportionality provision which allows smaller firms to omit certain information under special conditions. However, this is likely to be strictly interpreted. At the very least, stand alone UK investment management firms (i.e those not part of a group) are expected to file the following information:

 

  • A summary of how the firm determines its remuneration policy 
  • A summary of how the firm links performance to pay
  • Aggregate quantitative information broken down by significant business division (if such divisions exist) 
  • Aggregate quantitative information on remuneration for staff whose actions have a material impact on the risk profile of the firm.
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All firms were required to be broadly compliant from 1st January 2011. The FSA (FCA as of 1st April 2013) expected firms which were not subject to the more complicated structural arrangements to be fully compliant from 1st July 2011 and to have made their disclosures by 31st December 2011 at the latest.

 

The FSA (FCA as of 1st April 2013) has published templates and Frequently Asked Questions regarding Remuneration Policy Statements. If you would like further information on the remuneration code please click here to access IMS's articles on the subject.

 

The requirements originated from the global response to the financial crisis and most G20 countries are expected to have similar rules in place.

 

 

 

 

 

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