Issue - meetings

The Committee noted the content of the presentation and the ongoing discussions at a national level.

Mr Harkin gave a presentation on MIFID II and how this would have implications for the Fund.  The intention for MIFID II is to increase protection for investors.  The main impact for LGPS Funds would be to reclassify local authorities from “professional clients” to “retail clients” as in the UK, Local Authorities are not separate from the Pension Fund.  Retail clients have the highest “protection” under MIFID II.  However this would have a material impact on the ability to operate as a Fund as many investment managers and advisors only work with “professional clients”.   It was noted that the pools would have professional client status.

            Mr Harkin explained there is an option for LGPS Funds to “opt-up” to professional status if certain quantitative and qualitative criteria are met.  There would be no issue meeting the qualitative criteria but the quantitative criteria could be difficult to achieve.  There is significant potential risk to Funds unless this process is made simpler.

            The FCA issued a consultation which closed in January 2017 and a response is expected in March 2017.  All stakeholders have input into the consultation to express concerns and meetings with the FCA are going on with both the LGA/PLSA who have been lobbying regarding the LGPS implications, however nothing will be clear until March. 

            The LGPS pools are forming a group of practitioners to communicate these issues to the FCA.  Flintshire County Council volunteered and is providing the representation for the Wales Pool on this matter.  Mr Hibbert noted the importance of sorting the issues out at the start of a process so was supportive of the representation from the Fund.

RESOLVED

(a)       The Committee noted the content of the presentation and the ongoing discussions at a national level.