The Competition and Market Authority (CMA) has released its provisional decision report in relation to Investment Consultancy (IC) and Fiduciary Management (FM) services in the UK. Three of their key findings indicated that:

  1. Insufficient competition exists, which prevents trustees from getting the best service and value for money. They highlighted there was significant concentration amongst the ‘Big 3’ consultants.
  2. Trustees find it difficult to access the information required and evaluate the quality of advice given to assess whether they would be better off switching provider.
  3. Trustees were being steered towards investment consultants’ own FM services even where better deals existed elsewhere.

The CMA is proposing the following remedies:

  • Mandatory tenders when first appointing a FM provider or within 5 years if not done so already.
  • Greater support from The Pensions Regulator, including advice on running an effective tendering process.
  • IC and FM providers to report investment performance against common sets of standards.
  • FM providers to show fees explicitly to give trustees greater clarity.
  • Trustees to set out objectives for their investment consultant from the outset.
    A reinforcement of the FCA’s previously announced intention to widen the regulatory perimeter to capture the main services of IC and FM providers.

We are very supportive of the CMA’s proposed remedies. However we believe the CMA should go further and require trustees to take independent investment advice when investing in any regulated product including full or partial fiduciary management. To read a full copy of the CMA report click here.

XPS Investment provides independent investment advice and does not have its own FM products or have any ties with fund managers or platforms

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CMA decision - what it means for pension schemes

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XPS Investment

Patrick McCoy

Head of Investment 

T: 020 3327 5000

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