MIFIDPRU 8 Disclosure
Introduction & Disclosure requirements
This statement outlines the public disclosures for InvestEngine (UK) Limited ("the Firm" or "IEUK") under the Governance Arrangements, Own Funds, and Own Funds Requirements as required by MIFIDPRU, as of 31st March 2023. IEUK is authorised and regulated by the Financial Conduct Authority (FCA) under FRN 801128 and operates as an Investment Manager, offering clients ETF-based investment solutions through a platform-based service.
IEUK launched in January 2019, providing discretionary portfolio management services to retail clients. Initially, it offered a Growth portfolio, available through a General Investment Account (GIA) or an Individual Savings Account (ISA). These managed Growth Portfolios invest in low-cost ETFs that track the performance of global stock markets, bonds, and other assets. By diversifying investments widely, the Firm enhances growth opportunities while reducing risks for its clients.
IEUK also offers a DIY portfolio option, free of charge for ISA, GIA, and Business accounts. For SIPP accounts - whether managed or DIY - clients pay a nominal fee of 0.15%, capped at £200 per annum. Managed portfolios are charged at a low-cost rate of 0.25% per annum (inclusive of VAT).
IEUK’s activities are limited; significantly reducing its exposure to risks compared to many other investment managers:
- IEUK executes trades in ETF’s only and does not engage in the purchase, research, or investigation of individual company shares.
- IEUK does not act as a market maker for any investment.
- IEUK does not conduct proprietary investment research into quoted securities or engage in proprietary trading.
As a non-SNI MIFIDPRU Investment Firm, this disclosure is prepared on an individual basis and reflects the size, nature, scope, and complexity of IEUK’s activities. Additional details can be found in the Firm’s annual audited accounts, which are publicly available from Companies House.
This disclosure has been approved by the Board of InvestEngine (UK) Limited.
Governance
The Board has a supervisory role, overseeing the business, strategic direction, organisational structure, and risk management activities. The members of the Board of Directors, listed below, are responsible for the effective management of the company and meet at least quarterly.
The Board is ultimately accountable for overseeing and controlling business activities, shaping the strategic direction, and ensuring a robust corporate governance structure with clear, transparent lines of accountability.
| Director | Position | Number of additional directorships held |
| Andrey Dobrynin | Managing Director | 2 |
| Simon Crookall | Finance Director | 2 |
| Jeanette Cook | Director of Regulatory Compliance | 1 |
| Marianne Oliver | Operations Director | 0 |
| Alexander Rupin | IT Director | 1 |
The Managing Board, comprising FCA-approved Senior Managers, oversees culture, strategy, policy setting, risk management, conflict of interest management, and corporate management activities. The suitability, experience, knowledge, and skills of board members are assessed annually to ensure they remain fit and competent to fulfil their roles.
Given the straightforward nature of InvestEngine (UK) Limited’s business, the governance framework is considered appropriate. The Managing Board holds formal quarterly meetings, with additional meetings as needed to address critical business decisions.
To support day-to-day governance, the Senior Management Committee, a sub-committee of the Board, has formally delegated responsibilities under written terms of reference. This committee ensures effective and prudent management, segregation of duties, conflict prevention, and execution of the firm’s strategic plan.
In addition to the Senior Management Committee, several decision-making and oversight committees support the business. The Investment Committee, led by the Head of Investments, approves changes to investment strategy, asset allocation, and quarterly rebalances, as well as product or platform developments impacting discretionary services.
Although not required by its scale, the Risk Committee, chaired by the Director of Regulatory Compliance, helps the Board oversee risk management, ensuring that InvestEngine (UK) Limited identifies and mitigates risks in line with its risk appetite.
The Product Governance Committee oversees product development, approval, and monitoring, ensuring alignment with regulatory requirements and client interests. It also reviews product performance and ensures offerings meet the target market’s needs.
InvestEngine (UK) Limited remains committed to high standards of corporate governance. When appointing new Board members, careful consideration is given to existing skills, experience, board balance, and diversity. Each member is expected to contribute effectively both individually and as part of the team.
Risk Management Objectives and Policies
InvestEngine (UK) Limited has established a Risk Management Framework tailored to support the identification, assessment, mitigation, and monitoring of risks in line with its strategic objectives. This framework is proportionate to the scale and complexity of the business and outlines the processes and tools used to effectively manage risks.
At the core of this framework is an annual risk appetite statement, which defines the types and levels of risk the Board is prepared to accept in pursuit of the company’s goals. This risk appetite helps decision-making and is underpinned by defined risk limits that help manage exposures. The Board reviews and updates the risk appetite each year to ensure it stays aligned with the firm’s evolving objectives.
InvestEngine employs the "Three Lines of Defence" model to reinforce its risk management structure:
- 1st Line: Business units are responsible for managing risks on a daily basis, including identifying, assessing, and controlling risks within their areas and reporting on them.
- 2nd Line: The Risk, Oversight, and Compliance team provides independent oversight, offers regulatory guidance, and sets the framework to ensure Senior Management has the information needed to make sound decisions.
- 3rd Line: Given our scale, we conduct internal Compliance Monitoring and engage an External Audit for independent assurance on our financial statements, CASS compliance, and breach management across the first and second lines of defence.
This structured approach ensures that risk management is embedded throughout the business and supports the firm in achieving its strategic aims.
Risk management is overseen at the executive level, with continuous monitoring and advice from the Risk, Oversight, and Compliance team. InvestEngine also utilises a risk categorisation system to classify various risks, helping to systematically identify, assess, and manage them. This risk taxonomy consists of Level 1 (broad, high-level risks) and Level 2 (specific risk sub-categories), enabling structured risk analysis and communication. Level 1 risks are reviewed by the Board, who assess and set the risk appetite, while Level 2 risks feed into the overall risk scoring of the broader categories.
The Board of Directors plays a key role in determining business strategy, driving growth, and establishing and maintaining the firm's governance and risk management frameworks. Through this structured approach, InvestEngine ensures that risks are managed effectively to support long-term strategic objectives.
Risk Analysis:
InvestEngine (UK) Limited is exposed to a variety of inherent risks in the pursuit of its strategic objectives and business model. These risks are organised using a structured risk taxonomy.
InvestEngine (UK) Limited aims to ensure it has sufficient liquidity to meet its liabilities as they fall due, both in normal and stressed conditions, without incurring unacceptable losses or damaging its reputation. The Finance team regularly monitors the firm’s cash position, available resources, and forecasted cash flows, ensuring access to adequate liquidity when necessary.
In addition to liquidity management, compliance with regulatory capital requirements is closely monitored to avoid breaches. Capital acts as a buffer to absorb unexpected losses and to support the ongoing operations of the business, while ensuring compliance with the FCA's requirements under the Investment Firms Prudential Regime (IFPR). InvestEngine aims to maintain capital levels above the regulatory minimum to provide an extra margin of safety.
The primary categories of risk for InvestEngine are:
| Level 1 Risk | Level 2 Risk | DescripIon |
| Conduct Risk | Conduct Risk | The risk of financial loss or reputaIonal damage resulIng from inappropriate, unethical, or unlawful behaviour by the firm’s employees or management. |
| Strategic | Strategic Risk | The risk the business plan is exposed to events that could prevent or impact the achievement of the strategy, its execuIon, and events that arise because of following it. |
| Regulatory | Regulatory | The risk of regulatory or legal sancIon, reputaIonal damage, or financial consequences because of a failure to comply with, or adequately allow for changes in all applicable laws and legislaIon, contractual requirements or regulaIons. |
| Financial, Legal & Tax | Financial & Tax | The risk associated with the firm having insufficient financial resources or is unable to settle its financial obligaIons when they fall due, |
| ConcentraIon & Liquidity Risk | Having insufficient liquid resources, available capital or because of the failure of a counterparty in meeIng their obligaIons or performing these in a Imely manner. | |
| Credit & Counterparty Risk | Credit & Counterparty Risk | The risk of financial loss due to a counterparty failing to meet their contractual obligaIons. |
| Financial Crime Risk | Financial Crime Risk | The risk arising from fraudulent and dishonest acIviIes, such as theT, corrupIon, conspiracy, embezzlement, money laundering, bribery and extorIon. |
| Market | Market Risk | The risk associated with potenIal financial loss the firm might experience due to fluctuaIons in market prices, such as equity prices, interest rates. |
| Technology Risk | Technology Risk | The risk that a failure of technology systems and support to deliver the services to customers and to adapt to changing business needs, from systems that are not fit for current purposes, unintended or unexpected acIons of users and third-party suppliers, and intrusion and unwanted acIons of unauthorised users including through hacking and cyber-attacks |
| Resilience Risk | The risk associated with managing potenIal business interrupIons from a range of internal and external incidents or threats including environmental, systems, supplier performance, terrorism, economic instabiliIes, pandemic and operaIonal incidents. | |
| OperaIonal | Process ExecuIon & Trading Risk | The risk that the design and implementaIon of processes to support InvestEngine business acIvity lack both efficiency and effecIveness, leading to financial, client and reputaIonal loss. |
| CASS Risk | The risk of loss, misappropriaIon, or mismanagement of client assets that the firm is responsible for safeguarding, as outlined by the FCA’s Client Assets Sourcebook (CASS) rules. | |
| People Risk | The risk that resources and employment pracIces do not align to achieve sufficient capacity of capable and competent staff to deliver the firm’s operaIng and strategic objecIves. | |
| Product Risk | The risk that the products InvestEngine offer to clients and make available through are not fit for purpose, do not offer fair value for money, cause harm or conflict, are uIlised out with the intended target market or result in poor outcomes. | |
| Change Risk | The risks associated with the failure in the management of strategic and operaIonal change iniIaIves. |
How we aim to mitigate each risk type:
- Conduct Risk: We ensure fair treatment of clients and adherence to regulatory expectations through robust compliance processes.
- Strategic Risk: We align our business strategy with market trends and regulatory developments to mitigate strategic risk.
- Regulatory Risk: We maintain compliance with applicable laws and regulations through continuous monitoring and oversight.
- Financial, Legal, and Tax Risk: We mitigate financial, legal, and tax risks via expert review and sound financial planning.
- Concentration and Liquidity Risk: We diversify investments and maintain liquidity buffers to manage concentration and liquidity risks.
- Credit and Counterparty Risk: We assess counterparties and have policies to set exposure limits to manage credit risk.
- Financial Crime Risk: We prevent financial crime through AML and KYC controls, supported by continuous staff training.
- Market Risk: We manage market risk through diversification strategies, monitored regularly.
- Technology Risk: We safeguard against technology risks with cybersecurity measures and disaster recovery plans.
- Operational Risk: We control operational risk through internal Compliance Monitoring, staff training, and internal processes.
Own Funds
InvestEngine (UK) Limited’s own funds consist entirely of Common Equity Tier 1 (CET1) capital. Throughout the year ending 31 March 2023, the company fully adhered to all externally imposed capital requirements, as outlined in the ICARA regulations.
The tables below are derived from InvestEngine’s Report and Financial Statements as of 31 March 2023.
| Table 1: Composition of regulatory own funds - 31 March 2023 | |||
| Item | £'000 | Source based on reference numbers/letters of the balance sheet in the audited financial statements | |
| 1 | OWN FUNDS | 1,336 | |
| 2 | TIER 1 CAPITAL | 1,336 | |
| 3 | COMMON EQUITY TIER 1 CAPITAL | 1,336 | |
| 4 | Fully paid-up capital instruments | 13,965 | Note 19 |
| 5 | Share premium | - | |
| 6 | Retained earnings | (11,675) | Profit and loss account |
| 7 | Accumulated other comprehensive income | - | |
| 8 | Other reserves | - | |
| 9 | Adjustments to CET1 due to prudential filters | - | |
| 10 | Other funds | - | |
| 11 | (-) TOTAL DEDUCTIONS FROM COMMON EQUITY TIER 1 | (954) | Note 12, Note 14 |
| 19 | CET1: Other capital elements, deductions and adjustments | - | |
| 20 | ADDITIONAL TIER 1 CAPITAL | - | |
| 21 | Fully paid up, directly issued capital instruments | - | |
| 22 | Share premium | - | |
| 23 | (-) TOTAL DEDUCTIONS FROM ADDITIONAL TIER 1 | - | |
| 24 | Additional Tier 1: Other capital elements, deductions and adjustments | - | |
| 25 | TIER 2 CAPITAL | - | |
| 26 | Fully paid up, directly issued capital instruments | - | |
| 27 | Share premium | - | |
| 28 | (-) TOTAL DEDUCTIONS FROM ADDITIONAL TIER 2 | - | |
| 29 | Tier 2: Other capital elements, deductions and adjustments | - | |
Reconciliation of regulatory own funds to balance sheet in the audited financial statements as at 31st March 2023.
| Table 2 : Own funds: reconciliation of regulatory own funds to balance sheet in the audited financial statements | |||
| Balance sheet per audited financial statements | £'000 | Cross reference to Table 1 | |
| Assets - Breakdown by asset classes according to the balance sheet in the audited financial statements | |||
| 1 | Intangible assets | 954 | Item 11 |
| 2 | Tangible assets | 32 | |
| 3 | Investments | - | Item 11 |
| 4 | Debtors | 811 | |
| 5 | Cash at bank and in hand | 906 | |
| Total Assets | 2,703 | ||
| Liabilities - Breakdown by liability classes according to the balance sheet in the audited financial statements | |||
| 7 | Creditors: Amounts falling due within one year | 413 | |
| Total Liabilities | 413 | ||
| Shareholders' Equity | |||
| 8 | Called up share capital | 13,965 | Item 4 |
| 9 | Profit and loss account | (11,675) | Item 6 |
| Total Shareholder's equity | 2,290 | ||
Main features of own instruments issued by InvestEngine (UK) Ltd
- Share capital consists of fully paid “A” shares of £1 each, with 13,965,000 shares in issuance as at 31 March 2023.
- 100% of called up share capital is owned by the immediate parent company, InvestEngine (Holdings) Ltd.
- CET 1 comprises of Shareholder’s Equity less deductions for Intangible assets and Investments.
Own funds threshold requirements assessment and calculation
As required in MIFIDPRU 4.3, the firm’s own funds requirement must be the highest of:
- its permanent minimum capital requirement under MIFIDPRU 4.4 (£150,000);
- its fixed overheads requirement under MIFIDPRU 4.5; or
- its K-factor requirement under MIFIDPRU 4.6.
IEUKs’s own funds requirements as at 31st March 2023 is set out below:
| Table 3: Own Funds Requirements | |
| £’000 | |
| Permanent Minimum Requirement (PMR) | 150 |
| Fixed Overheads Requirement (FOR) | 1,256 |
| K-Factors | |
| Sum of the K-AUM requirement, the K-CMH requirement and the K-ASA requirement | 80 |
| Sum of the K-COH requirement and the K-DTF requirment | 1 |
| Sum of the K-NPR requirement, the K-CMG requirement, the K-TCD requirement and the K-CON requirement | - |
| K-Factor Requirement (KFR) | 81 |
| Own Funds Requirement (higher of FOR, PMR and KFR) | 1,256 |
Overall financial adequacy rule
As outlined in MIFIDPRU 7.4.7, a firm must always maintain own funds and liquid assets that are both sufficient in amount and quality to ensure:
- The firm remains financially viable throughout the economic cycle, with the capacity to address any significant potential harm from its ongoing activities; and
- The business can be wound down in an orderly manner, minimising harm to consumers or other market participants.
InvestEngine (UK) Limited remains compliant with the overall financial adequacy rule, holding sufficient capital to cover any potential risks that may arise. This will be reassessed during the current financial year. The firm ensures ongoing compliance with financial adequacy requirements, both in terms of own funds and liquidity resources, through the Internal Capital Adequacy and Risk Assessment (ICARA) process.
Internal Capital Adequacy and Risk Assessment (“ICARA”)
InvestEngine (UK) Limited adheres to the requirements of the Investment Firms Prudential Regime (IFPR) by continuously assessing its capital and liquidity through the Internal Capital Adequacy and Risk Assessment (ICARA) process. This ensures that sufficient resources are always available to meet the Overall Financial Adequacy Rule (OFAR). Through ICARA, the firm evaluates whether its capital and liquidity are adequate to support current and future operations, particularly in addressing risks beyond the basic Pillar 1 requirements.
This assessment considers various potential scenarios, including adverse conditions, as well as the firm’s budgeted business plan. By doing so, InvestEngine can identify potential shortfalls and determine if additional capital or liquidity is required, along with any mitigating actions to maintain a healthy financial position.
InvestEngine also ensures that enough capital and liquid assets are in place to facilitate an orderly wind-down of the business, if necessary, in a way that minimises disruption to clients and market participants. The ICARA is reviewed and approved annually by the Board, or more frequently if there are significant changes to the business. Ongoing capital and liquidity levels are also monitored throughout the year, with regular reporting to senior management and the Board.
Remuneration Policy & Material Risk Takers (MRT’s)
The firm adheres to the FCA’s remuneration code, which mandates having policies and procedures for both fixed and variable remuneration components. Given the firm's size, internal structure, and the nature and complexity of its activities, InvestEngine (UK) Limited has determined that a remuneration committee is not necessary based on proportionality.
Staff remuneration is primarily fixed, with amounts determined by various factors, including role-specific requirements, experience, professional qualifications, and seniority.
Quantitative Remuneration Disclosures
Below are the remuneration details for the period ending 31st March 2023:
- InvestEngine identified 8 employees as Material Risk Takers (MRTs).
- 'Senior Management' refers to those who were members of the InvestEngine Board during the period.
- 'Other Material Risk Takers' refers to MRTs who were not members of the Board during the period but are part of the Senior Management Team, holding key roles that significantly influence the firm's risk exposure.
| Table 4: Aggregate remuneration expenditure for the financial period ended 31 March 2023 | |||
| Senior Management | Other Material Risk Takers | Other Staff | |
| Number of beneficiaries | 4 | 4 | 20 |
| Aggregate fixed remuneration (£’000) | 434 | 297 | 558 |
| Aggregate variable remuneration (£’000) | 15 | 4 | 12 |
| Aggregate total remuneration (£’000) | 449 | 301 | 570 |
No guaranteed variable remuneration awards or severance payments were made to MRTs during the financial period.
Additionally, all unapproved share options in InvestEngine (Holdings) Ltd, granted to employees of InvestEngine (UK) Limited during the financial period ending 31 March 2023, were mutually cancelled in the subsequent financial period.
As a result, IEUK recorded no expenses related to equity-settled share-based payment transactions for the period ending 31 March 2023.
