Minutes & Actions. Financial Services Forum Thursday 28 th November 2013 Media Resource Centre Llandrindod Wells

Transcription

1 Minutes & Actions Financial Services Forum Thursday 28 th November 2013 Media Resource Centre Llandrindod Wells Chair of Financial Services Forum: Debbie Green, Coastal Housing Vice Chair: Sarah Cole, Cadwyn Attendance Name Dafydd Jones Joanne Jones Neil Edwards Joseff Harris Claire Clarke Tony Deakin Marc Jones Mark Potter Steve Evans Richard Griffiths Paul Ryan Stephen Wardrobe Elizabeth Howard Lorraine Oates Marisa Cass Charles Brotherton Steve Higginson Elizabeth Lendering Brian Robinson Yvonne Wilkinson Kathryn Roberts Adrian Williams Gareth Williams Adam Fletcher Stephen Morris Andrea Phillips Claire Cooze Lynne Williams Organisation Bro Myrddin Bron Afon Bron Afon Cantref Care & Repair Cymru Cartrefi Conwy Cartrefi Cymunedol Gwynedd CCHA Community Housing Cymru First Choice HA Grwp Gwalia Linc Cymru Melin Homes Merthyr Valleys Homes Merthyr Valleys Homes Mid Wales HA Monmouthsire HA Newydd Newydd North Wales Housing NPT Homes Pembrokeshire Housing Pembrokeshire Housing Pennaf Housing Group Pennaf Housing Group Rhondda HA Seren Group Taff HA

2 Gavin Harvey Kate Curran Katrina Michael Ned Michael Amy Barrett Alun Rawlings Stuart Epps Tai Eryri UWHA Valleys to Coast Wales and West Apologies Debbie Green Sarah Cole Bryn Ellis Andrew Bennett Lynda Clark Mike Dymond Wayne Fox Coastal Housing Group Cadwyn HA CT Clwyd Family HA Newport City Homes Rhondda HA Seren Group DG (Chair) & SC (Vice Chair) provided apologies so the Forum welcomed Dafydd Jones as Chair for this meeting. DJ welcomed attendees and announced apologies given. Update and actions from last meeting Financial Transaction Funding BP (Welsh Gov) stated that Treasury still haven t indicated timelines the funds are to be repaid. BP indicated the funding pot is wider than Housing alone so there will be several bids from other departments EL suggested the possibility of establishing a revolving fund. BP - Once details are clearer then something potentially could be worked up. More information to follow SHRG and Help-to-Buy update (BP) SHRG The loan documents have been agreed (Winkworths). 6 th December is the deadline for all documents to be signed. Carrie-Anne Riley (CAR) WG will be speaking with those who have not yet responded over the coming week. The accounting treatment has been through the SORP working party (Naheed Hussain WGov) and has been accepted. Payment: Given the timing, WG need to address the issue of utilising 4m (or part of) in this financial year. Payment in advance of need - 1 st of 30 year liability will be September 2014 then each September for following 29 years. WG have agreed to fund 50% of HA s legal & arrangement fees concerned with M&G arrangement. Action: SE to liaise with BP & CAR and Devonshires on billing arrangements Rate: The rate will be a 30 year amortising rate. Maximum rate will be when 1 st RSL signs. 90 days to draw down fixed rate 180 days to draw down variable rate

3 Action: BP to provide further confirmation on the detail (terminology) within Terms of Agreement regarding Gilt and Margin. AW queried any potential changes in margin and sought clarification from Welsh Government on this item. Help-to-Buy Scheme launched earlier this week for builders to register. The 170m scheme, called Help to Buy Cymru, will support the purchase of around 5,000 new homes in Wales during the next two and a half years. Borrowers will be able to purchase a new-build home worth up to 300,000 with as little as a 5 per cent deposit. The home must be the borrower s sole residence and the scheme is not open to buy-to-let investors. The Welsh Government will then fund a shared equity loan of up to 20 per cent of the purchase price. Buyers will then need to secure a mortgage to cover the remaining balance. The shared equity loan will be repaid when the home is sold, with 20 per cent of the sale price being repaid. From the time a buyer receives the shared equity loan they will be charged a small administration fee of 1 a month but no interest is paid for the first five years. Then, in the sixth year, borrowers will be charged interest of 1.75 per cent per year of the original shared equity loan amount. After this, the interest will increase every year, like the English version of the scheme. This increase is worked out by using the Retail Prices index plus 1 per cent. The scheme in Wales matches the UK Government scheme quite closely but it has the added benefit of being easier for small home builders to access. FVJ, Risk & Regulation (NH) FVJ NH provided an update on the current position. CML have still expressed a desire for a judgement to be provided on each RSL. However it was noted than CML and lenders do undertake their own due diligence in any case. KM, who sits on the Financial Advisory Group, stated that the regulator seeks to publish a report similar to HCA report in England. A joint meeting of Financial Advisory Group and Regulatory Advisory Group has taken place with the paper (as discussed as last Finance Forum) to go to RBW on 11 th December with proposal to publish early in new year. Concerns were raised on the objectivity of a judgement Will RSLs lending be adversely affected to take account of perceived risks. FVJ will be undertaken each year with the report in a new style. Action: NH agreed to issue a template in due course Regulation Cycle Proposal What will be different? The new approach will mean that the extent and focus of regulatory engagement will match the level of risk facing the Association and the quality and effectiveness of the Association s management of these. This does not only refer to risks arising from issues beyond the Association s control, such as welfare reform. Neither does it mean, of course, that all risk should be seen as bad rather, that the Association s board needs to be fully aware of the implications of any risk it chooses to take on and to manage it carefully. The more effective the Association s own arrangements for challenging and improving its performance and its stakeholder scrutiny and accountability arrangements, the less engagement will be needed by the Regulator.

4 LGPS Triennial Evaluation Tony Deakin Concerns over the increasing employers contributions (up to 19.6%) as a result of 2013 triennial evaluation, and the high risk categorisation of LSVTs Is there scope to challenge this? (KM) Issues include Risk Categorisation According to the current categorisation of employers, as applied by most Administering Authorities, an admitted body (LSVT) not being a tax raising body is categorised as high risk and therefore is faced with higher employer contributions. We do not consider LSVT Associations to be high risk for the following reasons and would suggest that these factors should be taken in to account in determining an employer s risk categorisation: Our regulator, WGov, has assessed us as having the highest possible ratings for both governance and financial viability. No housing association has ever gone into liquidation leaving a pension fund out of pocket. In cases where housing associations have got into difficulty, they have always been taken over by a larger association. Salary Assumptions long term assumptions being used by actuaries are still often linked to RPI at a time when CPI is becoming more relevant as an inflation indicator. Lower inflation therefore possible lower pay awards. The pay award assumptions used by Actuaries are a major factor in determining whether the Fund is underfunded and hence whether increases in Employer contributions are required Many LSVT Associations have provided a pension bond to their Administering Authority. However, we believe that the financial strength of LSVT Associations and the reasons set out above, demonstrate that even without a bond, they are at a minimum, a medium risk employer. It is suggested that, if it is cost effective, Administering Authorities consider using

5 a credit rating agency to obtain an independent view on employers strength of covenant or apply their own test as has for example the Social Housing Pension Scheme. (SHPS) Action: SE to liaise with TD, WGov regulator to assess how to challenge. Liaise with NHF to consider English LSVT stance who have engaged KPMG to act as their pension adviser on such matters. Rents Comments were made at the short turnaround time for understanding and modelling the proposed new policy. General acceptance of the move from RPI to CPI. Information has been collated by CHC, subsequent to RSL high-level modelling, and a response was made to WGov highlighting sector representations on the impact of the proposed new policy. New recommendations were requested, namely: Inflation index to be set at CPI +1.5% (as opposed to +1%), fixed for a period of 5 years That the new policy is introduced without the implementation of LHA Cap A T&F group be established to conduct further work on linking social rents to LHA and to review service charges structure and depooling An announcement from Minister is due before the Christmas break Budget Setting Items discussed: Proposed CoL increase for the Rents decision will affect this. RSLs approach to directing resources into Welfare reform / arrears management going forward. An acceptance that introduction of Universal Credit will bring more challenges difficult to predict possible payment issues as based on trying to judge tenant behaviour. Consultation on the SORP (FRS 102) Charles Brotherton 3 key areas to consider 1. Treatment of Grant SHG is on balance sheets as a deduction from coast. Can t do this in future as needs to be amortised through I/E 2. Financial Instruments A requirement to record all liabilities on balance sheet, including Operating Leases and other items such as holiday pay 3. Disclosure Pension items to be included on balance sheets and Impairment (reported cost vs value) - more emphasis on EUV-MH in future A general feeling that RSL Boards need to understand the nature of any changes and the affect they will have on Financial Reports. How will lenders act regarding possible detriment of covenants? Close of meeting Date of next meeting 28 th January 2014