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Iceland inquest backs outsourcing

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Outsourcing the management of cash investments could help councils overcome Iceland-style losses in banks, an independent review of Westminster City Council’s finances has claimed.

The KPMG review, which follows the council depositing£17m in Icelandic banks that then collapsed, cleared the council of negligence, but made 29 recommendations.

KPMG said the council should maintain responsibility for determining investment strategy but rely on outsourced fund managers to apply specialist expertise.

Westminster cabinet member for finance Melvyn Caplan (Con) said: “We already outsource around two-thirds of the management of our investment, so to outsource the whole function would not be a radical step.”

Review criticisms included Westminster not fully complying with Chartered Institute of Public Finance & Accountancy guidance on treasury management and a lack of input from senior management.

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