CMA announces reforms to the investment consultancy and fiduciary management sector

The CMA has announced a range of reforms to the investment consultancy and fiduciary management sector after finding competition problems. This follows an extensive market investigation into the sector which started last year, at the request of the Financial Conduct Authority (FCA).

The CMA’s final report sets out a number of changes to deal with its concerns including:

• Pension trustees who wish to delegate investment decisions for more than 20% of their scheme assets to a fiduciary manager must run a competitive tender with at least three firms. Trustees who have appointed a fiduciary manager without a tender must put the service out to tender within five years.
• Fiduciary management firms must provide potential clients with clear information on their fees and use a standard approach to show how they have performed for other clients, so that pension trustees have the information they need to compare different providers.
• The CMA recommends that the Pensions Regulator (tPR) produces new guidance to help trustees with these services.
• The CMA also recommends that the Government broadens the regulatory scope of both the FCA and tPR, to ensure greater oversight of this sector in the future.

The CMA will issue a draft Order(s), setting out its requirements, for consultation in early 2019 and the intention is to begin to implement the new requirements later in 2019.