Candid Financial Advice Limited
Pillar 3 Disclosure

Date: May 2023, based on financial year ending 31/10/2022.

Introduction

Candid Financial Advice Limited ('the Firm') is authorised and regulated by the Financial Conduct Authority ('FCA') and categorised as a BIPRU €50,000 Limited Licence Firm for regulatory purposes. This means we must publish the below disclosure, updated annually on this website, in accordance with BIPRU 11 to help you assess the risks facing our business and the capital backing it.

The three 'Pillars'

The European Union Capital Requirements Directive (‘the CRD’) is used across Europe to govern how much capital financial services firms must retain. In the UK this is supervised by the FCA using rules and guidance within the General Prudential Sourcebook (‘GENPRU’) and the Prudential Sourcebook for Banks, Building Societies and Investment Firms (‘BIPRU’). The FCA interpretation consists of three ‘Pillars’:

Pillar 1 sets out the minimum capital requirements
Pillar 2 assesses whether additional capital is required for any risks not covered by Pillar 1; and
Pillar 3 details aspects of a firms's risks, capital and risk management process

Disclosure policy

We are permitted to omit required disclosures if we believe that the information is immaterial, i.e. the omission would unlikely change or influence the decision of a reader relying on that. We are also permitted to omit one or more of the required disclosures where we believe the information is regarded as proprietary or confidential. Where we have omitted information for any of these reasons, a statement explaining this is provided in the relevant section.

Risk management objectives & policies

The Firm’s risk management framework reflects the FCA requirement that they must manage a number of different categories of risk, including: liquidity, operational, credit, reputational, business, market, interest rate and concentration.

Liquidity - The Firm generates cash from its operations and holds sufficient cash reserves to meet the continued operating needs of the business. This is supported by a robust budgeting and forecasting process which has the full involvement of directors.
Operational risk - The Firm does not handle client money and uses 3rd party custodians, all regulated by the FCA. Disaster recovery and continuity plans are in place.
Credit risk - The Firm does not undertake any lending activity. The major assets on the Firm’s balance sheets are bank deposits.
Reputational risk - The Firm is potentially exposed to reputational risk in the event that clients’ funds are invested in unsuitable investments. All investments are reviewed by the in-house investment committee and any recommendations must be derived from the Approved List.
Business risk - The Firm’s Pillar 2 business risk is primarily a fall in assets under advice either due to a market downturn or a loss of clients through reputational risk that leads to a significant reduction in revenue. To mitigate business risk, the directors review how significant economic and market downturns might impact our business and make contingency plans accordingly. The exposure to business risk is hedged, to a degree, by clients’ portfolios being well diversified.
Market risk - The Firm's revenues are linked to market movements, as addressed within business risk.
Interest rate risk - The Firm has no borrowings, hence no exposure to interest rate risk other than to the extent it might impact clients' investments.
Concentration risk - The Firm has a wide client base and is not reliant on the income generated by a single client.

Capital adequacy

The Firm’s capital requirement under GENPRU has been determined as the Fixed Overhead Requirement ('FOR').