Disclosure of information about policies on the integration of sustainability risks in insurance advice (Article 3)
The Environmental, Social and Governance Policy (the “ESG Policy”) is decided at the level of Lombard International Distribution Holdings S.à r.l. (“LIDH”) which defines the sustainability principles and targets of its distribution entities.
LIA Wealth Advisers is part of LIDH acting as the distribution entity and advisor of unit-linked life insurance products of Lombard International Assurance S.A (i.e. the insurance provider).
LIDH is committed to contribute towards implementing the UN 2030 Agenda for Sustainable Development and in particular, comply with the EU implementation measures on Sustainable Development. A strong governance structure is protecting the interests of the distribution entities’ clients, employees and stakeholders and helps LIDH to implement its sustainability strategy towards its distribution entities.
Given that LIA Wealth Advisers is acting as insurance distributor, it does not consider sustainability risks in its advice and for this reason the ESG policy does not define how sustainability risks are integrated in insurance advice.
No consideration of adverse impacts of insurance advice on sustainability factors (Article 4)
LIA Wealth Advisers only acts as the distribution entity and advises on unit-linked life insurance products of Lombard International Assurance S.A. (i.e. the product provider) which determines the investment parameters for those solutions and the principles of their underlying asset allocation in accordance with its own investment policy, Luxembourg law and, often, insurance law and taxation in policyholders’ countries of residence.
As explained on Lombard International Assurance S.A. website, the investment advice may derive from the investment decisions ultimately taken by independent investment managers. For this reason, it is the independent investment manager, investment adviser or, if this is the case, policyholder/holder who is best placed to integrate sustainability risk into investment decision making and assess the principal adverse impacts of investment decisions on sustainability factors and risks on investment returns.
As a consequence, where one or more of the underlying investment options offered by the insurance-based investment product promote environmental or social characteristics, the product promotes the same characteristics, which will be met only where, following the selection by the policyholder/holder, the products invests in at least one of those specific investment options and this option is kept during the holding period of the product.
Given that LIA Wealth Advisers is acting as insurance distributor, it does not consider the adverse impacts of investment decisions on sustainability factors in the insurance advice carried out.
Lastly, LIA Wealth Advisers would adapt the abovementioned approach as and when required by changes occurring to the sustainable finance regulation and industry implying the development of a methodology which measures and analyses the detrimental effects of sustainability in such a way that is useful to investors.
Remuneration policy statement (Article 5)
Remuneration Policy
Introduction
The Remuneration Policy is established at the level of Lombard International Distribution Holdings S.à r.l. (“LIDH”) in accordance with the applicable regulatory requirements.
Reviewed on an annual basis or when deemed necessary it applies to all staff members of the distribution entities which are part of LIDH. Its purpose is to define the principles and guidelines to establish and maintain equal, controlled and compliant remuneration practices that are designed to prevent (1) non-sustainable business decisions, (2) decisions in conflict with LIDH and its clients’ interests, (3) risk-taking outside of risk appetite, (4) fines from the regulator(s), (5) financial loss and/or (6) demotivation of staff members. The Board of Directors, in order to exercise its responsibilities regarding remuneration, delegates the oversight of the execution of this policy to the Remuneration Committee (RemCo).
The aim of LIDH is to provide fair remuneration that contributes to attract and retain people while incentivising and rewarding them via variable remuneration for the successful delivery of the Company’s strategy and business priorities. The mechanisms of this remuneration should, in compliance with applicable regulatory requirements and best market practice, (i) discourage risk taking beyond defined risk appetite (ii) prevent non-sustainable decision making and (iii) avoid situations of conflict of interest.
A sustainable remuneration framework
The remuneration framework of LIDH is designed to:
- Ensure that remuneration is appropriate and linked to the role of the individual.
- Reward the overall delivery of the business strategy, achievement of financial results and long term growth and sustainability.
- Aim at paying fair base pay, based on market practice, and at recognising and rewarding collective and individual performance via variable remuneration.
- Encourage sound corporate governance and a strict compliance with internal rules and procedures.
- Do not reward excessive risk-taking outside of confirmed risk appetite.
- Consider the principle of proportionality in defining the remuneration principles in such a way as to take into account the internal organisation and the nature, the scale and the complexity of the risks inherent to the business.
Specific provision for Material Risk Takers
LIDH identifies, on an annual basis, all employees whose work is deemed to have a major influence on the overall risk profile of LIA Wealth Advisers. A suitable compensation structure is designed and subject to deferral rules.
Claw back mechanism
The RemCo may decide, at any time within 3 years of the date of a Bonus allocation that the Employee who has been allocated that Bonus shall be subject to claw back of the related Bonus allocation, if such claw back is justified in relation to one or several of the following circumstances:
- any act of fraud or other intentional infringement of penal law caused by the Employee or of which the Employee had knowledge of but failed to prevent and/or flag to the board of the Company as appropriate;
- any circumstances caused through wilful misconduct and/or gross negligence by the Employee, or of which the Employee had knowledge of but failed to prevent and/or flag to the Board of LIDH as appropriate, that has (or would have if made public) a significant impact on the reputation of LIA Wealth Advisers; or
- a material misstatement of LIDH financial results, caused by or of which the Employee of LIA Wealth Advisers had knowledge, and which had been considered in the Bonus determination.
Inducement Policy
The Inducement Policy is established at the level of Lombard International Distribution Holdings S.à r.l. (“LIDH”) in accordance with the applicable regulatory requirements.
Inducements mean any fee, commission, or any non-monetary benefit provided by or to an intermediary or insurance undertaking in connection with the distribution of an insurance-based investment product or an ancillary service, to or by any third party except the customer or a person on behalf of the customer. Inducements do not include fees paid by the customer or internal payments to employees of insurance distributors.
The Policy defines that inducements and inducement schemes paid or received must not lead to a detrimental impact on the quality of the service provided to customers and prevent the insurance intermediary or insurance undertaking from complying with their obligation to act honestly, fairly and professionally and in accordance with the best interests of its customers.
The Policy defines clear criteria in order to assess whether an inducement can have a detrimental impact on the services provided to the client. On a regular basis all identified inducements are reviewed and assessed. Any inducement which is likely to have a detrimental impact on the services provided to the client are escalated to the Board of LIDH in order to implement mitigating actions.
LIA Wealth Advisers does not consider sustainability risks in its insurance advice since, as explained on Lombard International Assurance S.A. website, assets will exclusively be selected by independent investment managers appointed by Lombard International Assurance S.A. (the insurance producer) or (in certain) countries by, or with the confirmation of, policyholders themselves, who may in turn receive investment advice. As a consequence, this Inducement Policy does not take into account the integration of sustainability risks in the insurance advice.