MIFIDPRU 8 Disclosure

1. Introduction‍

This disclosure is in relation to Oakglen Wealth Limited (“Oakglen”, “we” or the “Firm”). Oakglen is a privately owned limited company incorporated in the United Kingdom, authorised and regulated by the Financial Conduct Authority (FRN: 96176) and is incorporated in England and Wales (company number: 13182724) with its registered office at 1st Floor, 30 Golden Square, London, England, W1F 9LD. Oakglen is a wholly owned subsidiary of the Oakglen Group.

Oakglen provides discretionary and advisory investment management services to a mixture of retail clients, which includes individuals, trusts, and charities.

As a UK Investment firm undertaking activities within the scope of the UK Markets in Financial Instruments Directive (‘MiFID’), Oakglen is subject to the prudential requirements of the Investment Firms Prudential Regime (‘IFPR’) contained in the MIFIDPRU Prudential sourcebook for MiFID Investment Firms of the FCA handbook.

The Investment Firm Prudential Regime (IFPR) is the new prudential regime for MIFID investment firms which aims to simplify the prudential requirements for UK investment firms. It came into effect on 1st January 2022 and introduces the Internal Capital and Risk Assessment (ICARA) process which is the centre piece of a firm’s risk management process and incorporates business model assessment, forecasting and stress testing, recovery, and wind-down planning.

Oaklgen is required to publish disclosures in accordance with the provisions outlined in MIFIDPRU 8 of the IFPR. These requirements are supplemented by the guidance set out in MIFIDPRU 8 published by the FCA. Under the IFPR’s firm categorisation, Oakglen is a Small and Non-Interconnected (“SNI”) MIFIDPRU investment firm since it meets the following criteria (see Chapter 2.1 of the IFPR Guide):

• does not have permission to deal on own account and/or place investments on a firm commitment basis;

• average assets under management (AUM) < £1.2 billion;

• average client orders handled (COH):
• – cash trades < £100 million per day;
• – derivative trades < £1 billion per day;

• average assets safeguarded and administered = zero;

• average client money held = zero;

• on- and off-balance sheet total < £100 million; and

• average total annual gross revenue from investment services and/or activities < £30 million.

The disclosure for Oakglen is prepared annually on a solo entity (i.e., individual) basis, as required by the MIFIDPRU rules. We believe the information provided is proportionate to Oakglen’s size and organisation, and to the nature, scope, and complexity of Oakglen’s activities.

The disclosure will be issued on an annual basis or more frequently if there has been a substantial change to the business and will be published on our website www.oakglenwealth.com/uk

This disclosure was ratified and approved for disclosure by the Board of Oakglen on 4th September 2024.

2. Risk Management Objectives and Policies (MIFIDPRU 8.2)

2.1. RISK MANAGEMENT

Oakglen has implemented ICARA as the risk management process to identify, assess, manage, monitor, and mitigate the risk of harm to clients, markets, counterparties, and where required, dictate the additional financial resources held to mitigate these risks.

OAKGLEN’S BOARD APPROVED RISK APPETITE STATEMENT

The Firm’s risk appetite is determined by the risk framework, reinforced by specific risk management processes and approval.

Risks are regularly reviewed, challenged, prioritised, and monitored by senior management, operational committees (such as the Governance, Risk Management & Compliance Committee (“GRC”) and Investment Committee (“IC”)) and the Board of Directors to determine the overall risk profile both qualitatively and quantitively. This process enables the residual risk to be assessed and the risk appetite of the Firm to be determined. To assist with the monitoring and management of the principal risks, further work was undertaken to establish and consider the specific risk appetite for each principal risk.

The Firm has a low overall risk appetite and is conservative in its attitude to risks.

In practical terms, the low-risk appetite means that while management are prepared to tolerate certain risks, close attention is paid to ensure these do not exceed tolerance levels. The Firm further implements its low overall risk appetite by ensuring that capital is maintained in excess of its regulatory requirement.

2.2. RISK MANAGEMENT POLICY AND BUSINESS RISK ASSESSMENT (“BRA”)

Oakglen’s risk management policy is reviewed (and if appropriate updated) at least annually and covers all of the key components of Oakglen’s risk framework. Oakglen’s Risk Register is reviewed quarterly.

The BRA is a document that is used to identify and assess the risks of money laundering and the financing of terrorism (“ML / FT”) to which the Firm is subject.  It considers:

• Information on ML / FT made available by the FCA; and

• Risk factors relating to our clients, the countries or geographic areas in which we operate, our products/services, our transactions and our delivery channels.

Senior management are fully engaged in the decision-making processes and take ownership of the risk-based approach. Senior management approval is specifically required for our policies, controls and procedures for mitigating and managing the risk of ML / FT identified in our risk assessment.  The document is formally reviewed at least annually.

Oakglen is responsible for ensuring that it has the appropriate systems and controls in place to identify, monitor and, where proportionate, reduce all potential material harms that may result from the ongoing operations of the business or from winding down the business and to hold adequate financial resources for the business it undertakes.

Oakglen identifies and assesses the risks and potential harms associated with its key business strategy, ongoing operations, business changes or external threats, as well as identifying and assessing the quality of controls in place to mitigate the associated risks and reduce potential material harms.

These assessments are completed using various processes including the Internal Capital and Risk Assessment (‘ICARA’), operational risk events, and maintaining of the Risk Registers.

2.3. RISK MANAGEMENT STRUCTURE AND OPERATIONS

The Oakglen Board of Directors has primary responsibility for both the management and the oversight of the Firm’s risks together with the quality and effectiveness of risk management, compliance and regulatory frameworks. The Board meets on a monthly basis to consider reports and issues escalated by their delegated groups and committees.

Other key committees are as follows:

GOVERNANCE, RISK MANAGEMENT & COMPLIANCE (“GRC”)

Constituted as a sub-committee of the Board, the GRC’s duties and responsibilities of the members are in addition to those that they assume as members of the Board.  The role of the Committee is to assist the Board in executing its responsibilities relating to all matters of governance, risk management and compliance.  To this end, its objectives are to ensure that:

• Legislative / Regulatory Requirements have been identified;

• Controls (including policies and procedures) have been identified and implemented;

• Key risks have been identified, analysed and assessed and appropriate risk management recommendations made;

• Management’s risk responses are appropriate and adequate;

• The risk management process is effective with appropriate assurance provided;

• Adequate progress is made against the compliance monitoring programme;

• Issues relating to actual / potential financial crime (AML / CFT / CPF / bribery & corruption / fraud / market abuse), or informational security breaches have been managed appropriately; and

• To attend to other such GRC matters as may arise from time to time.

INVESTMENT COMMITTEE (“IC”)

The IC’s principal responsibilities are to oversee and monitor the firm’s investment activities, including but not limited to investment strategy, risk management, asset allocation, and portfolio construction.

• Investment Strategy: review and recommend changes to the firm’s investment strategy and policy, including asset allocation, risk management, and investment guidelines;
• Portfolio Monitoring: monitor the performance of the firm’s investment portfolios;
• Risk Management: oversee the firm’s investment risk management policies and procedures, including the identification and monitoring of key investment risks;
• Compliance: oversee the firm’s compliance with applicable laws, regulations, and industry standards, and shall periodically review the firm’s compliance programme and policies; and
• Reporting: report its findings and recommendations to the Board of Directors and shall provide regular updates on the performance.

2.4. RISK ASSESSMENT

OVERVIEW OF KEY INVESTMENT RISKS

The Firm’s investment philosophy is founded on its investment beliefs. These beliefs provide a framework for exercising judgement and making investment decisions.

They are intended to ensure alignment between the Investment Committee and Investment Directors / Managers and provide a basis for strategic management of client portfolios.

The investment beliefs are not a checklist, but a guide for making decisions that often require balancing multiple associated decision factors:

1. A long-term investment horizon is a prerequisite to tolerate some volatility in asset values and returns, as long as there is sufficient liquidity within the portfolio.
2. Strategic asset allocation is the dominant determinant of portfolio risk and return;– The Firm will aim to diversify the portfolio across different risk factors / return drivers.
3. Risk will only be taken where The Firm has a strong belief that it will be rewarded for it.
4. Costs matter and need to be effectively managed.
5. The Firm’s preference is for active management over passive; however, index tracking strategies will be used where we lack conviction or demonstrable evidence that value cannot be added through active management.
6. Risks are multi-faceted and not fully captured through measures such as volatility or maximum drawdown – there is a clear process for managing risk through the development of a product risk rating framework.

We recognise that many of our peers have similar approaches to investing as we do. That said, our commitment to taking risks only where there is a strong belief in being rewarded, sets us apart from peers. Our risk management framework seeks to limit the drawdowns in our portfolios, resulting in a less volatile outcome for clients. Furthermore, we are not benchmark orientated and focus more on the risk-reward balance for clients.

Being independently owned, enables us to provide objective investment advice and recommendations to clients without being influenced by conflicts of interest. Our unbiased approach to product selection allows us to access emerging investment funds and managers. Our independence also enables us to provide flexibility in tailoring solutions to the individual client’s requirements, resulting in an approach that is client centric.

Our Investment Committee can make decisions quickly, responding to market opportunities or changing investment conditions thanks to efficient communication channels and collaboration among members. This results in greater flexibility and adaptability in managing client portfolios, whilst still maintaining adherence with our risk management focused culture.

RISK OF HARM TO FIRM, CLIENTS AND MARKETS

The assessment of harm from the Firm’s activities has been carried out starting with the Firm’s business and operating model.

Currently, the Firm carries out the following services for its retail clients:

• Investment portfolio management; and
• Investment advice (inclusive of the above).

The Firm has three service offerings:

1. Discretionary

Discretionary allows our clients to delegate the management of their investments to our experienced investment professionals where the team will actively manage each portfolio in-line with the client’s recommended investment strategy.

2. Advisory

Advisory is designed to complement our discretionary offering and is deal for clients interested in making investment decisions independently, whilst still receiving support from our team of investment professionals.

3. Execution-only

Execution-only is designed for clients with a high-level of experience of investing where our platform enables clients to implement their own investment strategies.

The Firm is exposed to existing and emerging risks and vulnerabilities from changes in operational and economic circumstances. Given the nature of the business and its operating model, the Firm’s subject matter experts and senior personnel have decided that the following risk scenarios have the potential to cause severe but plausible harms to clients and markets:

• Investment Guideline Breach (incorrect advice / misselling)
• Information Security Breach / Cyber
• Outsourcing Service Disruption
• Trade Error
• External Fraud (Invoice Fraud)
• Internal Fraud
• Breach of Consumer Duty (Harm to Clients)
• Breach of Client Money Rules (holding client money in breach of our regulatory permissions)
• Business Continuity Plan (“BCP”) Event (operational resilience)
• Conflict of Interest

The Firm does not hold client money and fully outsources custodian services to SEI.

Recognition of these risk scenarios is important from both the point of harms caused but also in terms of their impact on the Firm’s resilience and impact thresholds and tolerances.  The Firm must also comply with the FCA’s operational resilience requirement.

The Firm carries out frequent risk assessments within the key business areas.

The Firm reviews its Risk to Customer, Risk to Markets and Risk to Firm classifications at least annually through updating of its Business Risk Assessment (“BRA”).  This is agreed at GRC and then tabled to the Board.  The BRA details the various elements in place that aim to mitigate or reduce the risk of these risks:

• Committees, forums and oversight to ensure the appropriate “tone from the top”;
• Simple service and product offerings;
• Controls such as segregation of duties & IT General Controls; and
• Processes to follow (both digital through key systems and manual through use of set forms)

It is the Firm’s belief that it presents a low risk to markets due to its simple service and product offerings.

3. Governance Structure

Governance of the Firm is the ultimate responsibility of the Board of Directors. The Board is responsible for the ongoing success and development of the Company’s business as well as setting the risk appetite for the Firm as part of the risk framework.

The Board is also responsible for the legal entity’s strategy, long term objectives and financial performance and ensuring maintenance of a sound system of internal controls and risk management. The Oakglen Board consists of a combination of Executive and Non-Executive Directors. The Board is also responsible for:

• Setting the business strategy

• Setting the business’s appetite for risk

• Overseeing and controlling the business’ financial performance

• Identifying and managing any conflicts of interest that exist within the business

• Governing the business’s compliance with regulatory requirements and risk management

• Exercising operational and organisational governance

The Board delegate authority to committees and, in some cases, to individuals. For the avoidance of doubt, primary responsibility for the oversight of Oakglen rests with individuals who hold SMF functions and/or prescribed responsibilities under the FCA Senior Managers & Certification regime.

OWN FUNDS (MIFIDPRU 8.5)

The assessment of harm from the Firm’s activities has been carried out starting with the Firm’s business and operating model.

Oakglen is required to hold an appropriate level of Own Funds to cover potential harm.

Own Funds as of 31st December 2023 amounted to £946k and consist of capital and retained earnings.

4. Own Funds Requirements

The assessment of adequate Own Funds resources is based on the level of Own Funds required when compared to the amount available.

As at 31st December 2023, the Own Funds Requirements was calculated as the higher of:

Note 1:  The FOR is the amount equal to at least one quarter of Oakglen’s fixed overhead for the preceding year, calculated in line with MIFIDPRU 4.5.

Note 2: The KFR is calculated as the sum of each of the K-Factors that apply to the business. This is not applicable to SNI Firms such as Oakglen.

MIFIDPRU 7 requires Firms to comply with the Overall Financial Adequacy Rule (‘OFAR’). The OFAR states that Oakglen must at all times hold own funds and liquid assets which are adequate, both in amount and quality to ensure that:

• Oakglen remains financially viable throughout the economic cycle, with the ability to address any material potential harms that may result from its ongoing activities; and

• Oakglen’s business can be wound down in an orderly manner, minimising harm to consumers or to other market participants.

Through its ICARA process, Oakglen has identified that holding just the own funds and basic liquidity requirements would be sufficient for the Firm to meet the OFAR. This outcome has been determined through the various components of the ICARA process, which include, a business model and activity assessments, operational risk scenario modelling, economic and business strategy stress testing, liquidity stress testing and orderly wind-down planning.

In order to achieve its goals and maintain its capital adequacy position, the Firm may draw down on additional cash from its main shareholder as equity (or convertible debt instruments). In the event that business performance is slower than forecast, the Firm also has access to further funding from its group which may be drawn down at short notice.

5. Remuneration Policy (MIFIDPRU 8.6)

Oakglen’s remuneration policies are designed to incentive staff in line with the best interests of its clients within a framework of appropriate risk management. For example, our policy includes provisions for deferred or clawback of variable remuneration to discourage excessive risk-taking by employees.

The Firm has adhered with the requirements stipulated under MIFIDPRU 8 and specific details in regard individual employee remuneration are only disclosed if possible to do so, considering duties of confidentiality.

Basis of Remuneration

Remuneration at the Firm is made up of a combination of fixed and variable as well as deferred components. The Firm also maintains some ability to clawback remuneration in certain instances if it is later discovered that the employee engaged in conduct that resulted in significant harm.

Oversight

The Firm’s remuneration policy is subject to review by its remuneration committee who are responsible for ensuring that remuneration policies are designed to promote responsible risk-taking and are consistent with the Firm’s overall objectives.