PB Financial Planning Ltd Pillar 3 Disclosure and Policy

PBFinancialPlanningLtdPillar3DisclosureandPolicy

August 2015

The followinginformationisprovidedpursuanttothePillar3disclosurerules as laidoutbytheFinancialConductAuthority(“FCA”)insection11ofitsPrudential sourcebookfor Banks,BuildingSocietiesandInvestmentFirms (“BIPRU”).

PBFinancialPlanning Ltd(“the Company”) conductsmost of its business through itsAppointed Representative,PriceBaileyPrivateClientLLP (the “AR”)which acceptstheauthority of theCompany as regardsthematterssetout in this public disclosure.

In thisdisclosure theexpression“the Firm” refers to PBFinancial Planning Ltd and Price Bailey Private Client LLP

Background

TheFCAhasimplementedaprudentialframeworkforinvestmentfirmsthroughchangesto theFCAHandbookofRulesandGuidance(specificallyinBIPRU).Theframeworkconsistsof three“pillars”:

•Pillar1setsouttheminimumcapitalrequirements;

•Pillar2isanassessmentofwhetheradditionalcapitalisneededoverandabovethat determinedunderPillar1; and

•Pillar3requiresthefirmtopublishitsobjectivesandpoliciesinrelationtorisk management,andinformationonitsriskexposuresandcapitalresources.

Therulesprovidethatdisclosuresareonlyrequiredwheretheinformationwouldbe consideredmaterialtoa userrelyingonthatinformationtomakeeconomicdecisions.The Firmisa “BIPRU€50,000limitedlicense firm”notauthorisedtohandleclientmoneyortake proprietarytradingpositions.Asa consequencethemainrisks facingtheFirmrelatetoitsoperationsanditsbusinessenvironment. WhilsttheFirmdoeshave someexposuretocreditandmarketrisk,thisisnotconsideredtobematerial.

AlthoughtheFirmbelievestheriskmanagementframeworkoutlinedhereinis appropriate forthesizeandcomplexityoftheFirmandthattheFirm’scapitalisadequatetomeetthe risksassessed,itcannotguaranteethatthiswillactuallybethecaseintheeventany particularriskarises.Therewillalwaysbesomeunlikelyriskswithunusuallyhighimpact whichmayrequireadditionalcapitalshouldtheyarise.

We may omit one or more of the disclosures listed in BIPRU 11.5 if the information provided by such disclosures is not, in light of the criteria specified in BIPRU 11.4 IR, regarded as material.

Riskmanagementframework

TheFirmoperatesariskmanagementframeworkthatsetsouttheresponsibilitiesand escalationproceduresfortheidentification,monitoring,andmanagementofoperational andbusinessrisks.

TheBoardofDirectorstakesoverallresponsibilityforidentifyingmaterialriskstotheFirm andputtingappropriatemitigatingcontrolsinplace,usuallybyassigningresponsibilityfor specificareastoseniorindividualsoftheFirm.

Risksandmitigatingcontrolsareperiodicallyreassessed,takingintoaccounttheFirm’srisk appetite.WhererisksareidentifiedwhichfalloutsideoftheFirm’srisktolerancelevels,or wheretheneedforremedialactionisidentified,thenactionsaretakentoimprovethe controlframework.

TheBoardmeetsperiodicallytoreviewthequalityofthecontrolframeworkandtosatisfy itselfthatappropriatecontrolsareinplaceandthatmitigatingactionsaremovingforward.

TheFirmcontributesto,andreceivesguidancefrom,thePriceBaileyRiskManagement CommitteewhichcoordinatesriskmanagementacrossthewholeofPriceBaileyin accordancewiththePriceBaileyvalues,thoseofbestpractice,consistencyandcontinuous improvementhavingparticularrelevancetotheriskmanagementframework.ThePrice BaileyRiskManagementCommitteeis independentofboththeFirm’sBoardandthatof PriceBaileyanditreportsnolessfrequentlythanannuallytomembers.

Categorisedrisks

TheFirmratesoperationalandbusinessrisksas“medium”andthereforetheBoardfocuses itsattentiononriskswithintheseareas.

AlloftheothercategorisedriskssetoutintheFCA’sguidanceareratednomorethan“low” andaccordinglyareonlyreferredtotheBoardaspartofroutinereviewprocessesandwhen exceptionalcircumstancesarise.

Operationalrisk

Thisisdefinedastheriskoflossresultingfrominadequateorfailedinternalprocesses, peopleandsystemsorfromexternalevents,includinglegalandregulatoryrisks.TheFirm seekstominimiseoperationalriskthrougha controlsframework,particularlywhentaking instructionsfromnewclients,whenassessingnewinvestmentopportunitiesandwhen engaginginnewbusinessactivity.TheFirmconsidersriskswhichmayimpacttheFirm directlyorindirectly.ThemostsignificantoperationalrisksfacingtheFirmwouldmostlikely beafailureinseniormanagementperformance.

Businessrisk

Businessriskarisesfromexternalsourcessuchaschangestotheeconomicenvironmentor one‐offeconomicshocks,andalsofrominternalsourcessuchaspoordecisionsresultingin poorperformanceanddamagetotheFirm’sreputation.

Variousdifferentscenariosaremodelledinorderto assesstheimpactofadverseeconomic conditionsontheFirm’sfinancialposition.ThisenablestheFirmtomonitoritsbusinessrisk andtoassistinitsfinancialplanning.

Credit risk

TheFirmis exposedtocreditriskinrespectofincomereceivableandcashheldondepositatlargeinternationalcreditandregulatedinstitutions.Feesduefrominstitutionsaregenerallycalculatedmonthlybyanexternaladministratorbasedonmonthendfundsunder managementandarereceivedmonthly(occasionallyquarterly)in arrears.Consequentlythe Firmhasa limitednumberofcreditexposuresinrespectofwhichitusesthesimplified standardisedapproachwhencalculatingriskweightedexposures,inaccordancewiththe provisionsofBIPRU3.5.

Our ARisexposedtocreditriskinrespectoffeespayablebyprivateandcommercial clientsandislicensedforconsumercreditpurposesundera licenseissuedto the Company by the FCA.TheFirmusesnormalcommercialcreditcontrolprocedurestomanageexposures.

Marketrisk

TheFirmdoesnotinvestortransactonitsownaccountandthereforedirectmarketriskis notmaterialforthepurposeofthisdisclosure.HowevertheFirm’sclientsaredirectly affectedby marketmovementsandthereforetheFirmhasindirectexposuretothemarket. Thefirm’sgeneralpolicyis toavoidhighrisk“stockpicking”andfocusitsadvicetoclientson portfoliotheoryandinvestmentstrategy.

Liquidity

LiquidityriskwouldonlyariseintheFirmshoulda credit,marketorotherriskarisewhich resultsinfinancialloss.

TheFirmhasrobustliquiditymanagementandcorporategovernanceproceduresfor continuousmonitoringtoenableremedialactionifandwhenrequired.

Insurance

TheFirmhasfullcoverinplacetocoverallriskspertainingtoitsoperations.Thelevelof coverisreviewedatleastannuallyandasandwhentherearechangesinrisklevels.Coveris includedinagrouppolicyobtainedbyPriceBaileyLLP,whosedirectorsmonitorthe appropriatenessofthecoverandfinancialstabilityoftheInsurer.

Residual,ConcentrationandSecuritisationrisks

Residual,ConcentrationandSecuritisationrisksasdefinedbytheFCAarenotconsidered materialforthepurposesofthisdisclosure.

Reputational

TheCompanyandPriceBaileyPrivateClientLLParewhollyowned subsidiariesofalongestablishedfirmofCharteredAccountantsandwhilstseparately managedandcontrolledbytheFirm’sBoardofdirectors,theFirm’sfutureisinherently linkedtothefutureofPriceBaileygenerally.TheFirmbelievesthattheassociationwiththe PriceBaileyandCharteredAccountantsbrandsisofsignificantreputationaladvantage,and anylossthereofwouldsignificantlyincreasebusinessandoperationalrisks.Accordinglyin planningoperationsandfinances,theBoardincludeshighrisk,lowprobabilitystresstesting atalevelcommensuratewitha significantlossofbusiness.

RegulatoryandotherLegalrisks

TheFirmhasastructuredcomplaintshandlingpolicywhichincludesmonthlyreportstothe Board,whichconsiderswhetherindividualcomplaintscouldhaveimplicationsfortheFirm asawhole,andwhennecessarytakesexceptionalaction.

TheFirmoperatesina highlyregulatedenvironmentinarelativelyyoungindustry,where traditionalstandardsofprofessionalbusinessbehavioursarerepeatedlychallengedand extended,andwhereconsumerprotectionstandardsaresetatlevelsfarhigherthanfor mostbusinesssectors.AsawillingparticipantintheIndependentFinancialAdvisormarket theFirmacceptstheregulatoryenvironmentbutobservesthatthisitselfincreases operationalandbusinessrisks.TheFirmmanagesthisriskbyemployinga compliance managertooverseeallelementsofbusinessoperationsandreportmonthlytotheBoard.

Capitaladequacy

Asat31March2015,theCompany’sregulatorycapitalresourcesof£452,000aremadeup asfollows:

The Company’sPillar1capitalrequirementis calculatedinaccordancewiththeGeneral Prudential Sourcebook(“GENPRU”) asthehigheroftheFixedOverheadRequirement (“FOR”),thesumofmarketandcreditriskrequirements,andthebasecapitalrequirementof€50,000.TheFORiscalculatedinaccordancewithGENPRUandequatestoonequarterof theCompany’sannualexpensesexcludingdiscretionarycostsbutincludingthetotalof unavoidablecostsactuallysharedwithothers,anditisthisnumberwhichdeterminesthe Company’sbasecapitalrequirement.Asat31March2015theFirm’sPillar1requirement was£102,000.

TheCompanytakesa prudent approachtothemanagement of itscapitalbaseandmonitors itsexpenditure ona monthlybasisinordertotakeaccount ofanymaterial fluctuations which maycauseitsFixedOverheadsRequirement tobereassessed.TheCompanyensures that atalltimesithassufficientcapital tomeetitsFixedOverheadsRequirement and formallyverifiesthis ona monthly basis.

UnderPillar2 oftheFCA’scapitalrequirements,theFirmhasundertakenanassessmentof theadequacyofcapitalbaseduponalltheriskstowhichthebusinessisexposed(“ICAAP”). Asat31March2015,thisanalysisconcludedthatwithoneexceptionadditionalallocation of capitalisnotrequiredagainsttheidentifiedkeyrisks.

TheexceptionisthattheCompanyhasallocatedafurther£30,000tosupplementthe insuranceprotectionprovidedbythegroupprofessionalliabilityinsurancepolicy.This allocationhasbeenmadebyreferencetothelevelofexcesscarriedandguidancegivenby theFCAinitsInterimPrudentialSourcebookforInvestmentBusinesses.

AccordinglytheCompanybelievesthatTier1 capitalof£132,000willprovidesufficient capitalresourcestosupportitsoperationsoverthenextyearandthatnoadditionalcapital injectionsarenecessary.

Remuneration

Given the relatively small size of the Firm, remuneration policy for all staff is set by the Directors, having regard to Price Bailey LLP group policies. The directors review remuneration for staff based upon appraisal of individual skills and experience, assessing both financial and non-financial criteria and the resultant grading. Individual performance is also reviewed over an extended period to ensure the long term objectives of the staff and the Firmare not in conflict.

Some bonus opportunities are available. Financial advisers are eligible for quarterly and annual bonus should personalised financial targets be exceeded, subject to full compliance with the Firm’s procedures. If any substantial bonus payments are due these are partly deferred. Discretionary bonuses may also be awarded.

All staff are eligible to participate in the Price Bailey All Employee Share Ownership Plan.

Partner remuneration is wholly dependent on the financial performance of the Price Bailey Group as a whole.