When chapmen billies leave the street,
And drouthy neibors, neibors meet,
As market days are wearing late,
An' folk begin to tak the gate;
While we sit bousing at the nappy,
And getting fou and unco happy…..

Tam o’ Shanter, Robert Burns, 1790

As the Prime Minister has confirmed that pubs in England will be able to open outdoors from next week, although sadly in Wales and Scotland not until the 26th, our thoughts turn to beer in the sunshine. “Nappy” in the opening lines of Tam o’ Shanter, for those of you who are intrigued, is beer with a foamy head. With this in mind, our historical trivia in this edition brings together accountancy, beer and ancient Mesopotamia. Before that, some of our usual fare, including two important consultations that close before the end of April, the HMT UK funds review - Call for Input and the DWP pensions cap consultation.

HMT UK funds review - Call for Input

As we have been covering in our newsletter, on 26th January 2021, HM Treasury published a call for input for its review of the UK funds regime. The call for input can be found here and our detailed summary was in our newsletter at the beginning of February, which you can find here.

On 23rd March John chaired an AREF / INREV / IPF webinar, "UK Treasury's Funds Review: Call for Input consultation - Implications for the Real Estate Funds Sector”. You can find the recording

John wrote an article for the ICAEW on the Call for Input. You can find it

We have drafted our own, extensive, response to the consultation as well as contributing to other industry body responses.

Please email us
here if you would like a copy of our draft response. 

This call for input closes on 20th April 2021, and it is important that it receives widespread real estate industry support. We would therefore encourage people in the industry to submit responses either with their own comments or endorsing one of the other industry responses. We understand that AREF, the BPF, CREFC, INREV and the IPF are all submitting responses, or failing that, there is ours.

DWP pensions cap consultation

In our Budget summary in our previous newsletter, we mentioned that it had been announced that there would be a further consultation on changes to the pension charge cap to make it easier for defined contribution pension schemes to invest in funds with performance fees, as well as other changes to facilitate investment in illiquid assets by defined contribution pensions schemes. On 18th March 2021, the Department of Work and Pensions (DWP) published this consultation, "Incorporating performance fees within the charge cap”. This is a follow-up to the September 2020 consultation, "Improving outcomes for members of defined contribution schemes”. We responded to the earlier consultation, for which we get a small mention in the current one, although neither of our main recommendations have been taken up, yet. 

The title of the new consultation is slightly misleading as it covers more than just incorporating performance fees within the charge cap for defined contribution pension schemes. You can find the consultation 

The key points of our response are that we believe that 
  • in the interests of consistency and clarity that the list of property expenses used in the CTI templates for reporting to pension schemes is adopted as the definition of property expenses excluded from the DC charge cap;
  • carried interest and other performance fees should be reported as a reduction of risk adjusted net returns rather than falling within the charge cap. 
Please email us here if you would like a copy of our draft response. Feel free to borrow or refer to it if you wish to respond too. AREF will also be responding.

The consultation runs until 16th April so there is not a huge amount of time.

Cost Transparency Initiative (CTI) update 

The Cost Transparency Initiative (CTI) is the new industry standard for institutional investment cost data developed by the Pensions and Lifetime Savings Association, the Investment Association and the Local Government Pension Scheme Advisory Board.

John chairs the AREF Cost Transparency Initiative (CTI) & Expense Ratio Working Group and represents the real estate industry on the CTI Technical Expert Panel.  AREF has recently updated its Q&A on property specific aspects of the CTI reporting templates. You can find the updated Q&A


Number 97 in our regular series, “prepare yourself for disappointment on financial services”.

As we noted in our Brexit blog on Boxing Day (see
here), although the post Brexit trade agreement ran to over 1,200 pages, financial services was covered in a separate half page document festively dated 25th December 2020. The only specific commitment was to agree that "both parties will agree by March 2021 a Memorandum of Understanding establishing the framework for this cooperation”. As we noted at the time, we had very low expectations as to what the MoU would say, as the EU have no incentive to move with any alacrity on giving the UK and access to EU markets. We expressed considerable scepticism that the MoU would provide any great clarity, instead providing instead little more than an outline roadmap towards a future relationship. As we covered in this newsletter a month ago, at the end of February, Financial News published what it claimed was the draft MoU. You can find it here. It was as vague as we expected.

On 26th March, HM Treasury announced that technical discussions on the text of the Memorandum of Understanding have now been concluded. You can find the brief announcement 
here. This strongly suggests that the draft was broadly accurate and there is little to expect beyond a new discussion forum. Uplifting news about financial services equivalence is noticeably absent. We understand that the final text of the MoU may be longer than the draft, but the additional text does not really commit to anything more tangible than the discussion forum.

Whilst we do not usually share the Express as a “news” source, we feel that their headline on the MoU is something quite special, by managing to be wholly inaccurate and at the same time mangling the English language beyond recognition:

We will provide an update when the actual text of the MoU is available, although we do not expect it to be very exciting.

Joint Bank of England and Financial Conduct Authority Survey on liquidity management in UK open-ended funds

This was published on 26th March. It mainly relates to bond funds, and some funds investing in less liquid securities. Funds investing in inherently illiquid assets, such as property, were NOT included in this survey. It is however interesting background reading for those dealing with daily traded property funds. You can find the survey results here.

Forthcoming events at which John is speaking

ICAEW webinar
21st April

The Institute of Chartered Accountants webinar on on the future of retail on which John is speaking has been rearranged from 16th February to Wednesday 21st April. You can find details here.
If you are not a chartered accountant but would never-the-less like details, please let us know.

Property Week's property finance and investment forum
3rd June

John will be chairing a panel discussion on regulating open ended funds. You can find details of the forum here.

Historical trivia

We have previously covered the earliest known remains of what appears to have been a brewery from 13,000 years ago. If we skip forward to about 5,000 years ago to the city of Uruk in Sumerian Mesopotamia, a lot more detail is available. The "Kushim Tablet" is a one of a large number of clay tablets found in Uruk. Nobody is sure if Kushim was a person’s name or title, but Kushim seems to have been responsible for beer production in Uruk. The Kushim Tablet is the oldest item known recording a specific individual and, even more importantly, appears to be the oldest known invoice. It records "29,086 measures of barley 37 months Kushim”. A number of other tablets also mention Kushim, with quantities of barley, other ingredients and outputs of different beers.

This is the start of accountancy. The image below is a 5,000 year old clay accounting envelope and tokens from Uruk now in the Louvre.

As if the start of accountancy is not exciting enough, it is also the start of literature. The epic poem, the Epic of Gilgamesh is regarded as the world's first literature. After the death of his friend Enkidu, Gilgamesh, King of Uruk (circa 4,000 years ago), embarks on a journey to find the secret of eternal life. In the crucial scene for our purposes, he meets the innkeeper Siduri. She tries to convince Gilgamesh to abandon the whole quest thing and just settle down in the corner with a pint or too. Luckily for literature, he is undeterred and continues his journey. Although he finds out from the gods that he cannot achieve literal immortality, he does achieve metaphorical immortality as his name will live for ever. 

Whilst arguably not as important as the start of accounting and literature, a final important thing to note from the Uruk tablets is that the Sumerians used to drink their beer through straws from a shared bowl. Whilst this is probably not recommended during current social distancing rules, it is a practice we intend to resurrect as soon as permitted.

As usual, feel free to forward this email to others for whom it may be of interest.  If this message was forwarded to you, you can sign up to the mailing list here, and see the previous editions of this mailing here  You can unsubscribe from the list using the links at the bottom of this message.  Our privacy policy can be found here.

Helen Forbes
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