Our Policies

Pillar 3 Disclosure Statement – Position as at 31.03.2021

INTRODUCTION

The European Union (EU) Capital Requirements Directive (CRD) introduced a revised capital adequacy framework across financial markets in Europe in order to reduce the risk to consumers of financial loss and to minimise the effects of market disruption. The CRD applies to all investment firms authorised under the Investment Intermediaries Act, 1995 and the European Union (Markets in Financial Instruments) Regulations 2017.  CRD is designed to ensure that investment Firms have sufficient financial resources in relation to their risk profile and the controls that we have in place.

The Central Bank of Ireland is responsible for the implementation and supervision of CRD in Ireland.

the CRD required regulated firms to make significant changes to the way they calculate their capital requirements including the application of the concepts of three pillars under the CRD Framework:

• Pillar 1 Sets out the minimum capital requirements for credit, market and operational risks;
• Pillar 2: Pillar 2 requires the firm to assess, as part of its supervisory dialogue with the

Central Bank of Ireland, whether any additional capital should be maintained against risks not covered under Pillar 1. The process by which this is achieved is the Internal Capital Adequacy Assessment Process (“ICAAP”), which includes an assessment of each of the risks faced by the firm and the internal controls in place to manage or mitigate those risks.

• Pillar 3: Pillar 3 requires firms to disclose their assessment of the risks identified for their business and seeks to promote greater market discipline and transparency through the disclosure of key information about risk exposures and risk management processes.

Elkstone is subject to the requirements of the European Union (EU) Capital Requirements Directive IV (hereafter ‘CRD IV’) and Capital Requirements Regulation (hereafter ‘CRR’). CRD IV and CRR repeal Directives 2006/48/EC and 2006/49/EC.

 Pillar 1 capital requirements are the greater of:

• Initial minimum capital requirement of €75,000, OR
• the sum of credit risk and market risk OR
• the FOR (Fixed Overhead Requirement)         

Internal Capital Requirement

The Firm’s minimum capital requirements are calculated CRR and CRD IV and the Firm is satisfied its initial capital requirement is €75,000.The Firm will not be providing Investment Services 3 (Dealing on own account) or 6 (Underwriting of financial instruments or placing on a firm commitment basis as listed in Schedule I of  the European Union (Markets in Financial Instruments) Regulations 2017. As a result, Article 95(1), of the CRR applies and consequently Article 97 is available. It requires investment firms to provide own funds which are always more than or equal to the higher of the capital requirements calculated in accordance with the requirements contained in Article 92 of the CRR and the amount set out in Article 97 of the CRR which states that an investment firm shall hold eligible capital of at least one quarter of the fixed overheads of the previous year.

The internal capital requirement is the higher of Pillar 1 and Pillar 2 capital requirement. See ‘Capital Assessment’ section below for the calculation of Elkstone Private’s internal capital requirement.

Business Model

Elkstone Private Advisors Ltd. (‘the Firm’ or ‘Elkstone Private’) is an Irish-incorporated company and was incorporated on the 28^th of May 2013. It is a 100% owned subsidiary of Elkstone Capital Partners Ltd (‘Elstone Partners’). The Firm was authorised by the Central Bank of Ireland on 14^th June 2014 under the European Communities (Markets in Financial Instruments) Regulations 2007 to carry out the following regulated investment services:

Investment Services

1. The reception and transmission of orders in relation to one or more financial instruments.
2. Execution of orders on behalf of clients.
3. Portfolio management.
4. Investment advice.
5. Placing of financial instruments without a firm commitment basis.

Ancillary Services

1. Advice to undertakings on capital structure, industrial strategy and related matters and

Advice and services relating to mergers and the purchase of undertakings.

2. Investment research and financial analysis or other forms of general recommendation

Relating to transactions in financial instruments.

The Firm’s business vision is to operate as a client focused multi-family office primarily for high net worth individuals. The Firm’s vision is to be positioned both locally and globally as a recognised multi-family internationally focussed office, which can serve an increasing number of clients.

The Firm offers a range of services including non-regulated consulting and accounting services in addition to regulated investment services outlined above and these services extend to institutional clients.

The following Pillar 3 disclosures have been prepared as at 31^st March 2021, which is the accounting period end date for the Firm.

RISK MANAGEMENT FRAMEWORK 

The Board of Elkstone Private has established a comprehensive framework for the management of risk and has overall responsibility for risk management systems and related controls and for reviewing their ongoing effectiveness. The Board has delegated certain of its responsibility to the Operational Risk Committee and management in the first instance. The Board monitors the Company’s various risk exposures and also reviews financial performance, oversees regulatory compliance and monitors key performance indicators.

The primary objective of the Risk Management Framework is the protection, preservation and integrity of client assets both in custody and advisory terms. A secondary objective is the protection, preservation and integrity of Elstone Private. Having a Risk Management Framework facilitates the Firm in identifying, measuring, analysing, monitoring and reporting on the Firm’s key risks.

 Risk Governance and Responsibilities

The Board of Directors has ultimate responsibility for ensuring the Firm has appropriate structures, processes, policies and procedures in place in respect of Risk Management. The Board has delegated more detailed oversight of risk to Operational Risk Committee and to the Head of Compliance & Risk and to the rest of the Senior Management team.

Elkstone Private employs the three lines of defence model whereby business units are responsible for identifying risks in their areas and complying with the controls and procedures in their business area. The Head of Compliance & Risk carries out monitoring and provides advice.

Internal Control 

A core element of the Firm’s internal control process is the Firm’s company policies and procedures for the operations of the Firm. Key internal control policies include Business Continuity Plan (BCP), the Remuneration Policy and the Compliance Plan.

 Risk Register 

The risk management process of identifying, analysing and treating risks is documented in the Firm’s Risk Register. The Head of Compliance and Risk is responsible for updating the Risk Register with input from the business units.

 Business Error Process

The Firm has a business error process whereby incident report forms are required to be completed and sent to the Head of Compliance & Risk when a business error occurs. All reported incidents are investigated by the Head of Compliance & Risk, in consultation with management, and where appropriate, a report is prepared that is finalised following discussion. Corrective actions, lessons learned and any procedural changes are identified. The Head of Compliance & Risk enters the details on the Business Error log and provides a summary of the incident to Senior Management, the Risk Committee and the Board.

 Risk Appetite Statement

Risk appetite defines the amount and nature of risk the Firm is prepared to accept in pursuit of its business objectives. Risk appetite guides the Firm in its risk taking and related business activities, having regard to the maintenance of financial stability and solvency.

Key Risk Indicators

The Firm has defined Key Risk Indicators to track its profile against the most significant risks that it assumes.  The Key Risk Indicators have defined ranges which would rate a risk green, amber or red. The status of the Key Risk Indicators are reported to the Risk Committee and any risks rated red are discussed in detail at the Risk Committee.

 ICAAP Process  

The final element of the Risk Management Process is composing the ICAAP document.

 CAPITAL ASSESSMENT

The principal areas of risk identified as Part of the Pillar 2 Capital Assessment are outlined below:

• Strategic / Business risk
• Client Portfolio related risk
• Transactional & Operational risk
• Client Services
• Security
• Fraud/Breach of mandate
• Key Man/Personnel
• Reliance on third parties
• Internal Management of earnings
• Other (Employee claim, Rogue client, Regulatory Risk & Data Breach)

To calculate the Pillar 2 requirement, scenarios were run for the key risks and capital set aside based on the potential financial impact and the likelihood. The minimum Pillar 2 capital requirement was calculated as €400,000.

The Pillar 1 Capital requirement was calculated €322,000.

The internal capital requirement is the higher of the Pillar 1 and Pillar 2 capital requirement and was therefore €400,000

Capital Resources

The most recent audited accounts for the Firm show the capital and reserves of Elkstone Private to be €501,000 which is in excess of the Firm’s regulatory capital requirement.  All capital is categorised as Tier 1 capital.

Cathy Gaynor

Head of Compliance & Risk     

Markets in Financial Instruments Directive 2014/65/EU (“MiFID II”) as implemented in Ireland by the European Union (Markets in Financial Instruments) Regulations 2017 requires that Elkstone Private Advisors Ltd (‘the Firm’ or ‘Elkstone’) have in place an Order Execution Policy with clients, such that if:

• Receiving and transmitting your orders in respect of financial instruments or
• Executing client orders in financial instruments on your behalf,

that Elkstone takes all reasonable steps to obtain the best possible result (‘best execution’) on a consistent basis for you. This document sets out how Elkstone will aim to achieve best execution for you as defined in MiFID II.

1. Introduction

Elkstone Private is committed to providing the highest level of service and offering a highly personalised and responsive service to all our clients. We value our clients’ feedback, which is why we want all our clients to let us know if they are unhappy with our service or product provided.

We aim to resolve all complaints quickly and effectively. Elkstone Private manages complaints arising in respect of its regulatory products and services in accordance with applicable regulatory requirements and the Central Bank’s Consumer Protection Code. This policy sets forth the manner in which Elkstone Private responds to your complaint.

2. DEFINITION OF A COMPLAINT

The Central Bank’s Consumer Protection Code defines a complaint as “an expression of grievance or dissatisfaction by a consumer, either orally or in writing, in connection with:

1. the provision or the offer of the provision of a product or service to a consumer by a regulated entity; or
2. the failure or refusal of a regulated entity to provide a product or service to a consumer;

All complaints will be handled in accordance with the Central Bank’s regulatory requirements, as set out in the Consumer Protection Code, and Elkstone Private’s Complaints Policy.

3. How to make a complaint

We want you to be able to complain in a way that you prefer. If you are dissatisfied with our service you may let us know by phone, email, post or in person. All complaints should be made and addressed in the first instance to the Head of Compliance & Risk.

Elkstone Private Advisors Ltd,
32 Molesworth Street,
Tel: +353 1 662 5021
Dublin D02 Y512
Tel: +353 1 662 5021
Email: cathy@nullelkstoneprivate.com

4. How will Your Complaint be dealt with?

If it is possible, we will try to resolve your complaint within 5 business days of receipt of your complaint. Due to the complex nature of some complaints this may not always be possible and therefore an extended time period may be required in order to satisfactorily resolve your complaint.  Should this be the case, we will aim to acknowledge your complaint in writing within five business days.

We will investigate your complaint in a prompt manner and will provide you with a full response at the earliest opportunity. If your complaint is not resolved within 20 working days, starting from when the complaint was made, we will send you progress letters every 20 working days until we deem the complaint resolved. We will aim to resolve the complaint within 40 business days of having received your complaint and if not resolved within this timeframe, we will inform you of the anticipated timeframe within which we hope to resolve the complaint.

If the complaint is not resolved within 40 working days or if you are not satisfied with the outcome of your complaint, you may refer your complaint to the Financial Services and Pensions Ombudsman (‘FSPO’).

We try to resolve all complaints to our clients’ satisfaction.  Upon completion of our investigation we will notify you in writing within five business days of completing our investigation, confirming the outcome of the investigation, where applicable, the terms of any offer or settlement being made, advising you that you can refer the matter to the FSPO and include the contact details of the FSPO.

However, if you are unhappy after receiving our conclusions, you can convey your concerns to your contact in Elkstone Private dealing with your complaint, who will in turn issue you with a Final Response Letter so that you may refer your complaint to the FSPO.

5. Fspo contact details

Financial Services and Pensions Ombudsman,
3^rd Floor,
Lincoln House,
Lincoln Place,
Dublin 2.

Lo-call Number: 1890 88 20 90
Website: www.financialombudsman.ie

Introduction

It is Elkstone Private’s policy to observe and maintain high standards of integrity and fair dealing, to observe high standards of market conduct, and to act with due skill, care and diligence in conducting its affairs and those of its clients.

We are committed to identifying, with reference to the specific investment services and activities and ancillary services carried out by or on behalf of Elkstone Private, the circumstances which constitute or may give rise to a conflict of interest entailing a risk of damage to the interests of its clients.  Equally, in response, Elkstone Private will take all reasonable steps designed to prevent or manage such conflicts from adversely affecting the interests of its clients.  Conflicts of interest may arise between:

• Elkstone Private and the interests of one or more clients;
• Elkstone Private employees and the interests of one or more clients;
• The Group to which Elkstone Private belongs and one or more clients; or
• Two or more Elkstone Private clients.

Elkstone Private has an obligation to establish, implement and maintain an effective conflicts of interest policy. The purpose of this document is to provide a summary of Elkstone’s Conflicts of Interest Policy. In many cases, Elkstone will operate additional procedures that will be described in other policy documents, in order to implement the Conflicts of Interest Policy at a detailed level.

IDENTIFICATION OF CONFLICTS OF INTEREST

Conflicts of interest may arise in relation to providing investment services where the Firm, its, directors, employees, affiliates, or any person directly or indirectly linked to the Firm:

1. is likely to make a financial gain, or avoid a financial loss, at the expense of the client;
2. has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is contrary from the client’s interest in that outcome;
3. has a financial or other incentive to favour the interest of one client or group of clients over another, which may result in a failure to take into proper consideration the interests of that other person/entity;
4. carries on the same business as the client; or
5. receives or will receive from a person other than the client an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service.

It is the responsibility of all employees in Elkstone Private to be aware of the potential for conflicts of interest to arise within Elkstone Private’s operations. Employees receive training to create awareness of conflicts that may arise and to manage conflicts appropriately.  Where an employee believes they may have identified a conflict, they are required to report details to the Head of Compliance and Risk.  To avoid any impropriety, whether real or perceived, Elkstone Private has put in place controls:

• That minimise or prohibit those sets of circumstances in which a potential conflict of interest might arise;
• That identify any potential conflicts (real or perceived) that do arise; and
• Where a potential conflict of interest is identified, ensure that any competing interests are appropriately addressed.

PROCEDURES

Elkstone Private has considered the circumstances which constitute or may give rise to a conflict of interest entailing a risk of damage to the interests of its clients.  In response, the Firm has adopted procedures and measures in order to prevent or manage such conflicts from adversely affecting the interests of its clients.  The following includes some of the key procedures adopted to manage potential conflicts of interest, in our business:

• All employees are required to declare any outside affiliations and investments held.  Such interests include external and ancillary business activities, such as shareholdings, director appointments or consultancy roles. The Head of Compliance and Risk is kept informed of such interests and any changes;
• The Firm has established a Staff Personal Account Dealing Policy and a Gifts and Entertainment Policy, both of which aim to avoid potential conflicts of interest;
• When taking on a new client we assess for potential conflicts of interest. In circumstances where a prospective engagement is assessed as potentially giving rise to a potential internal business conflict with another relationship or business dealing within Elkstone Private, the Firm will determine whether or not to proceed with the proposed engagement or transaction;
• We impose strict controls, where necessary, concerning the dissemination of sensitive information through our Confidential Information Policy, which contains the key concepts of ‘Need to Know’ policy and ‘Transaction specific Chinese Walls’ to be put in place if appropriate;
• The Head of Compliance & Risk reports to the Board of the business with a view to guaranteeing the independence of the Compliance and Risk function;.
• Elkstone Private has established a Remuneration policy which aims to prevent or manage conflicts arising from the Firm’s remuneration and other incentive structures;
• The Firm has an Inducements Policy in place which ensures that all fees, commissions and non- monetary benefits are charged and structured in the best interests of the client and are charged in line with the requirements of the MiFID II Regulations;
• As an overarching safeguard in terms of employee behaviour, we require all employees to abide by the Central Bank’s Fit and Proper Standards and required them to be:
• Competent and capable
• Honest, ethical and to act with integrity; and
• Financially sound.

DISCLOSURES

Elkstone Private will take all reasonable steps to prevent conflicts from adversely affecting the interests of clients and will only revert to disclosure as a measure of last resort. Where organisational or administrative arrangements made by Elkstone Private to prevent conflicts of interest from adversely affecting the interests of its clients are not sufficient to ensure, with reasonable confidence, that the risk of damage to its clients’ interests will be prevented, Elkstone Private clearly discloses to the relevant client the general nature and/or sources of conflicts of interest, as well as the risks to the client that may arise as a result of the conflicts of interest and the steps taken to mitigate the risks before undertaking business on their behalf. Such disclosure is made in a durable form, is fair, clear and not misleading.

February 2021

The Conflict of Interest Policy is reviewed annually by Elkstone Private Board.

At elkstone we believe a responsible approach to environmental, social and governance (esg) issues has a positive impact on investment strategy and long-term sustainable growth.

Responsible Investment

As a company, we consider ESG investment critical to allow us to construct portfolios that satisfy our clients’ principles as well as their financial needs. Elkstone is committed to consider and factor in sustainability risk into our advisory and portfolio management investment services while meeting our client’s needs.  We consider the impact on health, safety, society and the environment in our investment selection.  The Firm’s ethos on wealth preservation and clients’ desires to generate sustainable long-term returns requires the investment process to have regard to and manage where possible adverse impacts on sustainability factors which may impact client portfolios or advise we provide.    It is our view that over time, this ESG strategy can generate long-term competitive financial returns as well as having a positive impact on society.

We don’t see investing responsibly as an obligation, we see it as an opportunity. That’s because the sustained success of any company depends on the health of the economic and environmental systems around it.