STATEMENT OF COMPLIANCE WITH S172(1) OF THE COMPANIES ACT 2006
The Company’s principal activities are the provision of financial and investment advice, and fund management to its clients. The Company needs to engage with clients to ensure continued provision of relevant services and products, supporting the long-term success of the organisation.
The Company holds various client events and conferences covering a range of topics and through the normal course of business the Company has regular client engagement, having meetings with clients as appropriate.
Following the initial disruption caused by the COVID-19 pandemic, in person meetings have resumed but the Company continues to make use of online / virtual environments and client engagement levels have been maintained throughout. See “How stakeholder interests have influenced decision making”.
The Company engages with clients with regards to existing and new capabilities and discussions have included environmental, social and governance (“ESG”) investing, fixed income and liability driven investment. These discussions resulted in further development of our ESG capabilities, the launch of ESG funds and an increase in activity with our strategic partners.
During and following the market volatility in the year as a result of Russia’s invasion of Ukraine and the bond market volatility in September and October, the Company actively engaged with clients, and the fund boards, to keep them informed of the situation and actions being taken.
The Company follows a standard internal process for the recording, assessment and settlement of clients’ grievances and complaints.
As a wholly-owned subsidiary it is important for SSGAL to remain aligned with the parent’s strategy whilst maintaining appropriate governance at the Company level.
The Company has engaged with the shareholder through State Street group (“Group”) committees and regular communication and reporting, including reporting the Company’s capital position and material items to the parent.
Engagement involved plans for the distribution of surplus cash and capital resulting in the payment of a dividend distribution, see “How stakeholder interests have influenced decision making”.
The Company is reliant on its workforce for the provision of services to clients and the continued engagement of the workforce is essential to meet changing client demands, regulatory requirements and effective risk management.
Senior management and executive directors hold regular townhalls. Additionally, staff are invited to “skip level” meetings with senior management allowing a two way dialogue. During 2022 these meetings were held in person and online in line with the hybrid working arrangements rolled out in the year.
The Company also participates in the global State Street employee engagement survey and in the year a full employee engagement survey was completed covering areas including engagement, alignment and cultural traits. The results of the survey have been received since the year end. Management has met to review them, and actions will be proposed and presented to the Board. Several snapshot surveys have also been used in the year to collect employee feedback on the workplace of the future and to gain insight on current levels of engagement, see “How stakeholder interests have influenced decision making”.
The Board has considered wider culture and conduct responsibilities, and working with senior management to determine how these are fulfilled and board reporting incorporates relevant metrics and assessments.
The Board recognises the importance of open and continuous dialogue with its regulator, the FCA. The regulator undertakes routine Supervisory Review and Evaluation Process (SREP) visits as well as having regular updates with management. Management engages with the regulator on material issues as they arise.
In the period, interactions with the regulator have been focussed on operational resilience, sustainability, the new Investment Firms Prudential Regime, consumer duty, product governance and product liquidity management.
The Board agreed to a number of actions to address the points raised by the regulator in the firm evaluation letter, and received regular progress updates from management.
As part of a wider group, the Company is both reliant on the group for provision of certain services and is a provider of services to other group companies. The Company has in place a Board-approved outsourced arrangement oversight framework and the Board receives updates from relevant group functions at board meetings, and results from performance reviews.
Areas covered by the Board in the period have been business continuity planning, IT and cybersecurity and outsourcing arrangements. There has been increased scrutiny of IT and cybersecurity, resulting in more focussed updates from Group IT on issues, as they relate to the Company, and their resolution.
The Board recognises that the Company has a limited number of non-group suppliers. However engagement is important with key suppliers to ensure continuity of service and to maintain awareness of developments and changes on both sides of the relationship. Management undertakes routine meetings with key external advisors and suppliers and the Company complies with payment practices and performance reporting.
The Group is committed to managing the wider social, environmental and economic impacts of its operations. The Board recognises its own obligations, and also challenges the Company’s own Environmental, Social and Governance (ESG) position, given its focus on ESG initiatives for clients. As part of its continued focus on ESG matters the Company was accepted as a signatory to the UK Stewardship code on 8th March 2022.
We define principal decisions as both those that are material to the group, but also those that are significant to any of our key stakeholder groups.
In making the following principal decisions the Board considered the outcome from its stakeholder engagement as well as the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company.
1 : Dividend
The Board reviewed the high level of cash and capital held by the Company in relation to its regulatory capital requirement, capital management policy and liquidity risk management framework as well as future requirements and potential risks identified in the ICARA. After due consideration, the directors decided to exercise their discretion and declared and paid an interim dividend of £60 million (2021: £35.2 million). After payment of the dividends the Company retains sufficient capital and liquidity to meet its requirements, plus a buffer in line with its risk appetite.
The Company’s MIFIDPRU public disclosure allows the Company’s stakeholders and other market participants to understand the Company’s capital and liquidity adequacy, particular risk exposures and risk management process.
2 : Return to office
Return to office planning has considered changes to future operational set-up and workplace requirements as a result of employee and client feedback. Following an initial return to office process for select staff in 2021, during the year the Company rolled out new technology and implemented a full hybrid work model for its staff.
By order of the board,
20 April 2023