On 18 July 2018, the Competition and Markets Authority (CMA) published a provisional decision report concerning its investment consultants market investigation. The CMA is carrying out this investigation following a reference from the FCA in September 2017.

The report states that the CMA has provisionally found that there is an adverse effect on competition and that material customer detriment may be expected to result from it in both the investment consultancy and the fiduciary management markets. The CMA has greater concerns about the fiduciary management market due to the features it has found.

Proposed remedies by the CMA include:

  • the introduction of mandatory tendering when pension trustees first purchase fiduciary management services and a requirement to run a competitive tender within five years if the existing fiduciary mandate was awarded without a competitive tender;
  • greater support for running tenders from The Pensions Regulator for investment consultancy and fiduciary management customers;
  • a requirement on investment consultancy and fiduciary management firms to report investment performance to their customers using a set of common standards;
  • a requirement on fiduciary management firms to disaggregate fees for prospective customers and provide greater clarity to existing customers on costs, including those relating to exiting the service; and
  • a requirement on pension trustees to set objectives when they hire an investment consultant, in order to be able to judge quality of the service.

In order to reinforce some of the above remedies, the CMA also recommends that the Government extend the FCA’s regulatory perimeter to include the main activities of investment consultancy and fiduciary management providers.

Interested parties are invited to submit reasons in writing as to why these provisional findings and remedies should not become final or why they should be varied before 24 August 2018.