Issue - meetings

To consider whether to seek elected professional client status with all relevant institutions in order to ensure the Council can continue to implement an effective investment strategy.

RESOLVED:

(a)         That the potential impact on the Council’s investment strategy of defaulting to a retail client with effect from 3rd January 2018 be noted; and

RECOMMENDED:

(b)        That applications for elected professional client status be commenced immediately with all relevant institutions in order to ensure the Council can continue to implement an effective investment strategy;

(c)         That authority be delegated to the Section 151 Officer for the purposes of completing theapplications and determining the basis of the application with respect to professional client status as either full or single service; and

(d)        That in electing for professional client status it be acknowledged and agreed that the Council will forgo the protections available to retail clients, as set out in Appendix 1 to Report Item 5 to the Cabinet.

In accordance with best practice, the Cabinet considered a mid-year monitoring report on treasury management performance.  Members were reminded of the wider economic context within which investment decisions were being made, as set out in Section 2 of the report.

The Council was currently investing in accordance with the low risk, high quality lending list outlined in the Treasury Management Strategy.  It was intended to further diversify into more secure and/or higher yielding asset classes for surplus cash, recognising the increasing risk associated with short-term unsecured bank deposits, certificates of deposit and money market funds.  The Council was currently achieving a return of 0.99%, with the asset value having increased to £73.2 million as of 31 July 2017.  Exposure to unsecured bank and building society investments has also been reduced with greater investment in local authorities and pooled property fund assets and pooled multi-asset funds, which should also achieve greater returns.  These achieved better returns when held for the medium term, which was the Council’s intention.

The Council had not taken on any new external borrowing, with it being more cost effective to fund new capital expenditure through internal borrowing.  No additional external borrowing was planned.

A change to the rules on how local authorities can access regulated financial services would mean that the default position would be that they would be treated as “retail clients”, the same as individuals and small or medium sized businesses.  The Council could however “opt up” to return to “professional client” status.  This would allow continued access to the current asset classes without the increased fees that retail asset classes demanded.  The Council would not then be able to take advantage of some of the protections available to retail clients, as set out in Appendix 1 to Report Item 5 to the Cabinet, but this was no change from the current position.  Section 5 of the report set out the further considerations that would need to be taken into account.

For the year to date the Council had operated within the Prudential Indicators and Treasury Management Indicators which had been set in February 2017 as part of the Medium Term Financial Plan.

RESOLVED:

(a)         That the potential impact on the Council’s investment strategy of defaulting to a retail client with effect from 3rd January 2018 be noted; and

RECOMMENDED:

(b)        That applications for elected professional client status be commenced immediately with all relevant institutions in order to ensure the Council can continue to implement an effective investment strategy;

(c)         That authority be delegated to the Section 151 Officer for the purposes of completing theapplications and determining the basis of the application with respect to professional client status as either full or single service; and

(d)        That in electing for professional client status it be acknowledged and agreed that the Council will forgo the protections available to retail clients, as set out in Appendix 1 to Report Item 5 to the Cabinet.