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.
As a result of the disruption caused by the COVID-19, pandemic meetings have been moved to online / virtual environments and the level of client engagement has not been disrupted. See “How stakeholder interests have influenced decision making”.
During the period one of the key areas of focus have been the ability of the Company to support clients post Brexit, and whilst some client contracts had previously novated to SSGA Ireland Ltd others remained with the company given the change in Brexit timings.
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.
Following the identification of an error in the determination of an externally provided index used in two of the funds for which the Company is investment manager the Company actively engaged with clients, and the fund boards, to keep them informed of the situation and remediation actions being taken. The Company was not at fault for the performance differential experienced by the funds and had no legal or contractual obligation to compensate impacted clients. Despite this fact, the Company made a one-time cash payment to impacted clients.
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 Group committees and regular communication and reporting, including reporting to the parent of the Company’s capital position and material items.
The Company has engaged with the shareholder through 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 2021 these meetings continued online and were supplemented by regular all staff calls to provide COVID-19 and return to office updates.
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 working from home, 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 Covid-19 and return to office & hybrid working, see “How stakeholder interests have influenced decision making”.
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 undertake routine meetings with key external advisors and suppliers and the Company complies with payment practices and performance reporting.
The State Street Group is committed to managing the wider social, environmental and economic impacts of its operations. The Board recognises its own obligations, and also challenged 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.
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 ICAAP. After due consideration, the directors decided to exercise their discretion declared and paid interim dividends of £35.2 million (2020: £35 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 Pillar 3 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.
Regular business continuity planning meetings were held to ensure uninterrupted provision of services and communications to clients, regulators and group companies and to protect the well-being of employees. The company implemented working from home arrangements for all staff in March 2020 and moved internal and external meetings online.
Return to office planning has considered changes to future operational set-up and workplace requirements as a result of employee and client feedback. During the year the Company commenced a return to office process for select staff with a full hybrid work model to be implemented in 2022.
By order of the board,
Date 21 April 2022