Freshstream Investment Partners LLP
MIFIDPRU 8 Disclosure
August 2023
Introduction
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 Freshstream Investment Partners LLP (“Freshstream” 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.
Freshstream 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 8.6 to disclose information on its remuneration practices.
This document has been prepared by Freshstream 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 financial year-end.
Remuneration Practices
Overview
As an SNI MIFIDPRU Investment Firm, Freshstream is subject to the requirements laid down in Chapter 19G.1.6 of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). 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 Freshstream’s remuneration 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, Freshstream 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.
Freshstream 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 Practices
Remuneration at Freshstream is made up of fixed and variable components. The fixed component is set in line with market competitiveness at a level to attract and retain skilled staff. Variable remuneration is paid on a discretionary basis and takes into consideration the Firm’s financial performance as well as the financial performance of each business unit, and the financial and non-financial performance of the individual in contributing to the Firm’s success. All staff members are eligible to receive variable remuneration.
Freshstream’s policy includes a framework for assessing the level of remuneration to be paid to staff members. The framework applies both ex-ante and ex-post risk adjustment criteria to the level of remuneration paid. Factors considered include:
- The current and future risks identified by the Firm;
- How the Firm takes into account current and future risks when adjusting remuneration;
- The policies and criteria applied for the award of variable remuneration;
- The policies and criteria applied for the award of severance pay.
Freshstream has set a ratio between the variable and fixed components of the total remuneration, by way of ensuring that the components are appropriately balanced and that 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 particularly 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 Management Committee is responsible for setting and overseeing the implementation of Freshstream’s practices. In order to fulfil its responsibilities, the Management Committee:
- Is appropriately staffed to enable it to exercise competent and independent judgment on remuneration 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 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 practice is consistent with the business strategy, objectives, values, and interests of the Firm and of its clients.
Freshstream’s remuneration practices are reviewed annually by the Management Committee.
Quantitative Remuneration Disclosure
For the financial year ended 31 March 2023, the total amount of remuneration awarded to all staff was £3.6m. The ratio between fixed and variable component (including bonus) is approximately 2:1. For these purposes, ‘staff’ is defined broadly, and includes, for example, employees of the Firm itself including its overseas offices, and any salaried partners of the Firm.