Pillar 3 Disclosure
and Policy 2017


The Capital Requirements Directive (CRD) created a revised regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investment firms must maintain. In the United Kingdom, the Directive has been implemented by the Financial Conduct Authority (FCA) and the framework consists of three ‘Pillars’:

  • Pillar 1: sets out the minimum capital requirements that firms need to maintain;
  • Pillar 2: requires the firm to assess whether its Pillar 1 capital is adequate to meet its risks and is subject to annual review by the FCA; and
  • Pillar 3: requires disclosure of specified information about the underlying risk management controls and capital position.

The rules in the FCA Prudential Sourcebook for Banks, Building Societies and Investment Firms (BIPRU) set out the provisions for the Pillar 3 disclosure.  This document is designed to meet our Pillar 3 obligations.

Frequency of disclosure

Canada Life Asset Management Limited (CLAM) will be making Pillar 3 disclosures annually.  These disclosures are based on the Company’s position as at 31 December each year.  The Board of Directors feel that disclosure on an annual basis is appropriate based on the firms current risk exposures and will review the need to disclose more frequently as part of its internal review process.

Location and verification

The disclosure will be published on our website www.canadalifeinvestments.com.  The information contained in this disclosure is not subject to external audit.

Background to firm

CLAM is authorised and regulated by the FCA as an Investment Management Firm.  The firm’s activities give it the BIPRU categorisation of a “Limited Licence” and a “BIPRU €50k” firm. CLAM is the appointed investment manager of a number of collective funds and manages portfolios on behalf of other companies in the Great-West group.

Risk management objectives and polices

CLAM is governed by a board of directors. The Board is comprised of directors who have the necessary skill and experience to lead and control the Company. The Board is responsible for setting the risk policy and risk appetite in line with the Company’s risk management framework and relevant guidelines. CLAM has put in place a Risk & Controls Self Assessment (RCSA) to assure itself that all of the key risks to which it is exposed are effectively identified and assessed.

There is a Board Risk Committee which has responsibility for monitoring risk and reporting to the Board.

Business Risk

CLAM operates in a competitive industry, downturns in the economy and capital markets can lead to a reduction in assets under management and management fees. As part of the strategic planning process the Board will assess the impact of various economic scenarios on the performance of the Company.

CLAM is constantly developing the funds and products it provides which gives rise to expense risk. Expenses have therefore been stressed in respect of any unanticipated expenditure requirements and increases in the cost of expected expenses.

CLAM does not employ any staff but utilises staff from the Canada Life group (CLFIS Limited). Pensions are provided at the group level and charged out along with other staff costs. On a look through basis CLAM would be responsible for its portion of the pension scheme risk.

Credit risk

CLAM is exposed to credit risk through its receivables from clients and exposure to banks and money market funds where reserves are placed on deposit. Strong internal controls exist to ensure clients pay within the agreed credit terms and funds are placed with financial institutions that meet the required external credit ratings as determined by the Board in the CLAM Investment Operating Policy.

Market risk

CLAM does not hold any investments in its own name other than money market instruments. It therefore does not directly face market risk. It is however potentially at risk from a general fall in the market or specific asset class as this affects the level of fee income that can be earned. The impact of changes in market value on income levels have been reviewed and are considered not to be significant in terms of CLAM’s capital.

Currency Risk

CLAM manages some portfolios of foreign currency denominated assets where its investment management fee is received in that currency. This fee income is therefore exposed to fluctuations in exchange rates.

Liquidity risk

CLAM consistently maintains sufficient liquid resources to meet its obligations from financial liabilities. Cash flow and capital adequacy forecasts are carried out on a regular basis. Surplus cash is placed on short term deposits to ensure liquidity.

Operational Risk

These are risks resulting from inadequate or failed internal processes, people and technology or from external factors such as suppliers or changes in regulations or law which may adversely affect CLAM. Through the CLAM RCSA, operational risks are identified and using internal and external loss data a range of severe yet plausible scenarios are compiled. The Board, as part of its internal control and corporate governance procedures, regularly review these risks and their impact.

Conduct risk

CLAM has developed a range of collective funds that it markets to IFAs, institutional investors and fund managers. There is a risk that these funds are not appropriate to the customers they are being marketed to, they do not meet expected outcomes or are misrepresented.  CLAM has extensive processes including review by Risk and Compliance teams to ensure that all conduct issues have been considered. In addition Capita as the appointed Authorised Corporate Director (ACD) has its own controls over this.

Capital resources

As at the 31st December 2016, the capital position of CLAM in relation to its regulatory requirement is as follows:


Pillar 1 capital requirement is the greater of
base capital requirement of €50,000
the sum of the market risk and the credit risk
the fixed overhead requirement £2,659,000
Pillar 1 capital requirement (fixed overhead requirement) £2,659,000
Pillar 2 capital requirement £6,834,000
Capital requirement under the CRD highest of Pillar 1 and 2 £6,834,000
Capital Resources  
Share Capital £2,250,000
Audited Reserves £7,515,000
Tier 1 Capital £9,765,000
Tier 2 Capital Nil
Total Capital resources under the CRD £9,765,000
Surplus / ( Deficit ) Capital £2,931,000


Remuneration disclosure year ending 31 Dec 2016 View PDF

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