Important Information

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Site Information

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Firm Information

Turcan Connell is a Scottish Partnership regulated by The Law Society of Scotland. Registered office Princes Exchange, 1 Earl Grey Street, Edinburgh, EH3 9EE.

Turcan Connell Asset Management Limited is authorised and regulated by the Financial Conduct Authority, reference number 550227. Registered office Princes Exchange, 1 Earl Grey Street, Edinburgh, EH3 9EE.

VT Turcan Connell Balanced Fund, VT Turcan Connell Income Fund and VT Turcan Connell Absolute Return Fund are the available funds of V T Turcan Connell Investment Funds an Investment Company with Variable Capital (ICVC) authorised by the FSA, reference number 190667. Turcan Connell Asset Management Limited is the Investment Manager for the VT Turcan Connell Investment Funds. Valu-Trac Investment Management Limited is the Authorised Corporate Director for the funds.

Governance Structure of the Turcan Connell Group

The Partners of Turcan Connell are committed to high standards of governance in relation to our own business. We wish to ensure that we have in place structures and processes which are robust and effective. The Partnership meets on a monthly basis and the Partnership has overall responsibility for the strategic direction of the Turcan Connell Group. At these monthly meetings, the Partnership receives detailed reports on the financial and operational performance of all aspects of the Group's activities. Douglas Connell is Senior Partner and chairs the Partnership. He is also Chairman of Turcan Connell Asset Management (TCAM), the wholly owned subsidiary company of the Turcan Connell Partnership. Ian Clark is the Managing Partner of Turcan Connell and is responsible for the day to day operations of the Partnership. Alex Montgomery, as well as being a Partner of Turcan Connell, is Chief Executive Officer of Turcan Connell Asset Management and has executive responsibility for the overall management of TCAM. The Turcan Connell Group has the benefit of advice and support from two non-executives – Ed Murray and Lesley Knox.

Risk Warnings

Information provided on this site and any opinions expressed are for general use and not personal to your circumstances, nor are they intended to provide specific legal or financial advice. No information on this site should be viewed as an offer or recommendation to dispose of or acquire any investment or undertake any specific transaction. If you are unsure as to the suitability of any investment you should contact a financial planner who will provide tailored advice.

All information provided is based on our understanding of current legislation which is subject to change.

You should remember that the value of investments and the income derived from them may fall as well as rise and you may not get back the full amount you invest. Past performance is not a guide to future performance. Taxation is based on individual circumstances and is subject to change.
 
Conflicts of Interest Policy Summary

Turcan Connell Asset Management Limited's policy is to avoid any conflicts of interest between itself and its associates on one hand and its clients on the other. In the event of such a conflict arising, it will always put the interests of the client first.

If there is a conflict between two or more clients, the company will act in the most fair and equitable way it can. For example, client orders for the same security will be dealt with in the order they are received, except in exceptional circumstances, such as when an aggregated order may be in the best interest of clients.

If you would like to see a copy of the full Conflicts of Interest Policy please click here.

UK Stewardship Code – Disclosure Statement

Turcan Connell Asset Management (“TCAM”) fully supports the principles embodied in the UK Stewardship Code (“the Code”) which was introduced by, and is overseen by, the Financial Reporting Council (“the FRC”). Click here to read our Disclosure Statement.

Intellectual Property

All rights to use the content of this site belong to the Turcan Connell Group and any unauthorised use, including transmission, extraction, modification and distribution is strictly prohibited. You may not reproduce part or all of the content of this site in any form unless it is for personal use.

Pillar 3 Disclosure

Turcan Connell Asset Management as at 31st March 2014

Introduction

The Pillar 3 disclosure of Turcan Connell Asset Management Limited (“the Company”) is set out below as required by the European Union’s Capital Requirements Regulations (“CRR”). This follows the introduction of the Capital Requirements Directive (“CRD”) which represents the European Union’s application of the Basel Capital Accord. The regulatory aim of the disclosures is to improve market discipline.

Frequency

The Company will be making Pillar 3 disclosures annually.

Media and Location

The disclosure will be published on our website.

Verification

The information contained in this document has not been audited by the Company’s external auditors and does not constitute any form of financial statement and must not be relied upon in making any judgement on the Company.

Materiality

The Company regards information as material in disclosures if its omission or misstatement could change or influence the assessment or decision of a user relying on that information for the purpose of making economic decisions. If the Company deems a certain disclosure to be immaterial, it may be omitted from this Statement. Some of the disclosures required under the CRR are deemed immaterial or are omitted since they are not relevant to the Company’s business.  

Confidentiality

The Company regards information as proprietary if sharing that information with the public would undermine its competitive position. Proprietary information may include information on products or systems which, if shared with competitors, would render the Company’s investments therein less valuable. Further, the Company must regard information as confidential if there are obligations to clients or other counterparty relationships binding the Company to confidentiality. In the event that any such information is omitted, we shall disclose such and explain the grounds why it has not been disclosed.
 

We have made no omissions on the grounds that it is proprietary or confidential.

Company Background

The Company is incorporated in the UK and is authorised and regulated by the FCA as an Investment Management company. The Company’s activities give it the IFPRU categorisation of a “limited licence 125K investment firm”.

1. Risk management objectives and policies

Risk Management Objective 

The Company’s general risk management objective is to develop governance structures and systems and controls to mitigate risk to a level that does not require the allocation of material Pillar 2 Capital.

Governance Framework

The Board of Turcan Connell Asset Management Limited is the governing body ultimately responsible for the risk management regime. The Board has authorised the Risk and Compliance Committee (comprised of Non-Executive Directors and the Chief Executive Officer) to investigate any activity as to the risks which are deemed appropriate to accept and those which are unacceptable and should be eliminated or mitigated. The committee exercises its remit through quarterly review of reports which cover, among other matters, regulatory compliance, systems and controls, client assets, anti-money laundering and all significant risks including operational and investment and financial markets risk. It also reviews the ICAAP and recommends it for approval to the Board. The committee report to the Board on the quality of internal policies, disciplines, controls, processes and monitoring procedures in place to deal with risk, making recommendations for improvements where applicable significant internal control failures have occurred. The Risk and Compliance Committee met four times during the year to 31st March 2014. We also have in place an Investment Advisory Board containing external members. Although this is not a formal part of the governance arrangements it supports the risk management of the company by providing independent input and comment on financial markets and investment strategy. 

Individuals are selected to become directors of Turcan Connell Asset Management or members of the Investment Advisory Board (IAB) on merit and to ensure that all of the skills and experience required within the regulated business are covered. There is no policy on diversity with regard to selection of directors or IAB members. A profile showing the knowledge, skills and experience of each Board member is provided under the People section of this website.  

Risk Framework

Risk within the Company is managed by use of the following: 

  • regular reviews by the CEO, Compliance Director;
  • taking a conservative approach to risk;
  • identifying risks and recording them in the ICAAP;
  • reviewing the ICAAP at least annually at meetings of the Board;
  • undertaking scenario Analysis and Stress Tests on the most significant risks. This informs the Company how risks are likely to behave and what, if any, impact there is likely to be to our balance sheet;
  • applying an internal control framework with risk scoring to govern processes and procedures and to mitigate risks and
  • maintaining a risk event reporting mechanism which seeks to identify the root cause of any failures or omissions.

Risk Statement 

The Board is ultimately responsible for reviewing the effectiveness of the Company’s risk management arrangements and systems of financial and internal control.  These arrangements are designed to mitigate rather than eliminate the risks within the business and offer reasonable assurance against fraud, material misstatement and loss. The Board considers that it has in place adequate systems and controls with regard to the Company’s profile and strategy.

2. Own Funds

The company is an IFPRU 125k Limited Licence Firm because it does not deal for its own account or underwrite issues on a firm commitment basis. It manages individual portfolios and it holds client money. An IFPRU firm must maintain at all times capital resources equal to or in excess of the base requirement (€125,000). The Pillar 1 capital requirement for an IFPRU 125K Limited Licence Firm is set out in Article 95 (2) of the CRR and is the higher of the credit risk capital requirement and the market risk capital requirement, or the fixed overheads requirement (i.e. one quarter of the firm’s relevant fixed expenditure). For the Company, the Pillar 1 requirement is the fixed overheads requirement. The Company must maintain at all times capital resources equal to or in excess of the Pillar 1 requirement. 

During the 12 month accounting period to 31st March 2014 the Company complied fully with all capital requirements and operated well within regulatory requirements. At the accounting reference date, the Company held the following capital position: 

Ordinary share capital

 

£1,825,668

Retained earnings

 

£335,770

Regulatory adjustments

 

Nil

Core Tier 1 Capital

 

£2,161,438

Tier 2 Capital

 

Nil

Own Funds

 

£2,161,438

 

 

 

Risk weighted exposure amount

 

£19,204,425

 

 

 

Core Tier 1 and Total Capital Ratio

 

11.25%

Surplus capital over minimum requirement

 

£625,084

The Own Funds of the Company are its Shareholder Funds as shown in its Balance Sheet at the reporting date.  There are no regulatory adjustments or deductions from regulatory Own Funds.  The deferred tax asset of £4,994 has not been deducted from Own Funds as permitted under Article 48 (1) of the CRR; a full analysis of Own Funds is included in Annex 1. 

The main features of the ordinary shares in issue are shown in Annex 2 as required by Article 437 (1b) of the CRR. The Company does not have any form of Additional Tier 1 or Tier 2 capital.  

The Core Tier 1 and Tier 1 capital ratios (both 11.25%) exceed the minimum ratios by 6.75% and 5.25% respectively.

3. Approach to assessing adequacy of Own Funds

Capital adequacy is monitored daily by Finance and with monthly reporting to the Board.  Capital planning forms a key part of the Company’s budgeting process. The capital plan ensures the Company has sufficient Own Funds to support its business objectives.

The Company operates an ICAAP process during the year that considers all of the risks faced by the Company, the likely impact on the business if they were to occur, how these risks can be mitigated and the amount of capital it is prudent to hold against them. The ICAAP is updated annually with approval provided by the Board.  During the year ended 31st March 2014 the Company concluded that no additional capital was required above its Pillar 1 requirement.  

4. Principal risks  

The principal risks to the financial position of the business and the severity and probability of impact are discussed below together with steps that could be taken to mitigate these issues. These risks are analysed between the following categories:  

  • Credit Risk
  • Market Risk
  • Interest Rate Risk
  • Operational Risk  

The Company is not exposed to any risk arising from the holding of equities in other companies nor is there any Securitisation Risk in the business of the Company as none of its activities uses securitisation. There is no packaging of assets for on-sale or similar activities. The Company does not make use of derivatives to manage its own risk profile and accordingly is not exposed to counterparty credit risk.  

Credit Risk  

For its Pillar 1 regulatory capital calculation of credit risk, under the credit risk capital component the Company has adopted the Standardised approach which weights exposures according to their risk profile and, where appropriate, credit ratings in accordance with the CRR. 

Non-payment of invoices  

The Company issues invoices to Financial Planning clients which carries the risk that they may not pay the fees charged. The incidence of unpaid fees within the Financial Planning area of the business is historically very low.  

The firm’s revenues also include investment management fees which are payable in arrears and where the risk of default is low as these are charged against the funds under management and on a basis agreed and documented in advance.  

Market Risk  

The Company does not itself take positions in shares or other instruments and is not exposed to foreign-exchange, settlement or commodities risk.  The firm is indirectly subject to market risk as income is dependent on the value of client assets under management. This risk is mitigated by the asset allocation strategy which ensures that clients have diversified portfolios with limited exposure to any one asset class. The firm’s Pillar 2 business risk assessment principally takes the form of a fall in assets under management following a market downturn leading to lower management fee income, although other risk scenarios are considered. The Company regularly analyses various different economic scenarios to model the impact of economic downturns on its financial position.  

Interest Rate Risk  

The only Interest Rate Risk is in relation to the Company’s funds on deposit. Any impact on the Company is limited and is regarded as negligible.

Operational Risk  

Operational risk is defined as the risk of loss arising from inadequate or failed internal processes, people and systems or from external events, including legal risk. It includes potential low frequency, high severity events such as IT security and internal and external fraud. The company is aware that operational risk can never be eliminated, but seeks to minimise the probability and impact of operational events.  

The company’s business areas manage this risk through applicable controls and loss mitigation techniques, including use of insurance. These activities include a balance of policies, procedures and internal controls to ensure compliance with laws and regulations. Further assurance is provided by the company’s compliance department and through regular testing of the business continuity plan.  

The operational risk policy incorporates a review of the company’s risk matrix by the Risk & Compliance Committee. The company has implemented a risk and control assessment by the Compliance department through discussion with Directors and relevant managers. This scores risk events as to probability and impact as well as evaluating the design and performance of controls that have been put in place to mitigate that risk. The results of the assessment are included within the risk matrix framework. 

As a limited licence 125K investment firm the Company assesses the need to hold additional Pillar 2 capital against operational (and other) risks during its ICAAP but has concluded that the Pillar 1 capital requirement adequately covers all risks.

5. Remuneration 

The FCA's Remuneration Code ("the Code") applies to certain individuals' total remuneration, both fixed and variable. 

Proportionality  

The Company is subject to the Remuneration Code and is categorised as a Level 3 firm.  

The Company's policy is designed to ensure that it complies with the Code and therefore that its compensation arrangements:  

  • are consistent with and promote sound and effective risk management;
  • do not encourage excessive risk taking;
  • include measures to avoid conflicts of interest; and
  • are in line with the Company's business strategy, objectives, values and long-term interests. 

Application of the requirements  

The Company is required to disclose certain information on at least an annual basis regarding its remuneration policy and practices for those staff whose professional activities have a material impact on the risk profile of the Company (“code staff”). This disclosure is made in accordance with the Company's size, internal organisation and the nature, scope and complexity of its activities.  

Summary of information on the decision-making process:  

  • The Company's policy has been agreed by senior management in accordance with the Code's principles.
  • The Company has in place an independent remuneration committee which met once during the year to 31st March 2014. The members are all Non-Executive Directors and considered independent.
  • The Company's policy will be reviewed as part of an annual process or following a significant change to the business requiring an update to its internal capital adequacy assessment.
  • The Company's ability to pay bonuses is based on the performance of the Company overall and is based on the Company's actual results for the year in question adjusted for any need to retain resources to meet regulatory capital requirements or for business development. 

Summary of how the Company links between pay and performance  

The Company's remuneration policy is linked to the performance of the Company as a whole, each department and of individual employees. Remuneration comprises of both fixed and variable remuneration with variable remuneration paid in the form of cash bonuses. The payment of cash bonuses is deferred and made in equal instalments in June and December following the financial year in which they are earned to those who are still employed at that time. No element of variable pay is guaranteed for any code staff.  Management take both financial and non-financial criteria into account when assessing individual performance. Individuals are rewarded on an assessment based on their contribution to the overall strategy and achievement of the business taking into account factors including, where appropriate:  

  • Investment management.
  • Operations.
  • Client interaction including business development.
  • Overall performance, reliability and effectiveness.  

Aggregate remuneration of Code Staff  

For the year ending 31st March 2014 there were 14 code staff (as defined below) until 31st May 2013 and 13 code staff thereafter.  

Remuneration earned in the year was divided between fixed and variable remuneration as follows:  

Fixed remuneration £0.91m 

Variable remuneration £0.06m  

The ratio of fixed to variable remuneration earned in the year to 31st March 2014 was over 15:1  

Fixed remuneration consists of base salaries only while variable remuneration consists of cash bonus payments. The six non-executive directors who receive fixed fees are not entitled to any element of variable remuneration. All of the variable remuneration noted above was awarded in respect of performance during 2013/14 and is deferred and due for payment in June and December 2014. Variable remuneration awarded in respect of 2012/13 of £85,000 was paid during 2013/14.  No performance adjustments were made in respect of these payments. One severance payment was made during the year of £100,000. 

Remuneration Code staff comprises categories of staff including senior management, risk takers, staff engaged in control functions excluding CF30’s (i.e. CF1 – 29) and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the company's risk profile. 

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