On 26 February 2019, the FCA published a letter responding to the Competition and Markets Authority’s (CMA’s) letter of 12 December 2018 which concerned the CMA’s findings and remedies from its market investigation into the supply and acquisition of investment consultancy and fiduciary management services.
The FCA’s letter notes that the CMA identified a number of remedies and supporting recommendations to address the issues that they had identified in their market investigation. Following on from this, the FCA outlines the remedies which the CMA identified as applying to the FCA.
The FCA has chosen to introduce the six identified remedies through a statutory order; the remedies will come into effect 6 months after the order comes into force. Following this, the FCA will consult on introducing into its Handbook the relevant rules for firms offering fiduciary management services. The remedies to be introduced are:
- requiring pension scheme trustees to tender ahead of purchasing fiduciary management services where the mandate would cover 20% or more of the scheme’s assets;
- firms which offer both fiduciary management and investment consultancy services will be required to separate the marketing of fiduciary management services from the provision of investment consultancy advice;
- fiduciary management providers will be required to disaggregate fees for current customers, including providing enhanced disclosure of underlying investment fees;
- firms offering fiduciary management services will be obliged to provide more information about their fees to prospective customers, including transition and exit costs, asset management fees and custodian fees;
- firms offering fiduciary management services will be required to report past performance to prospective customers using a standardised methodology; and
- information provided to prospective customers on the performance of recommended asset management products and in-house funds would be required to adhere to certain MiFID requirements.
The FCA notes that certain parts of the CMA’s remedies will sit alongside, and will be additional to, the obligations that exist under MiFID II. The CMA is currently preparing the relevant notification to be made to the European Commission. The FCA is supportive of the notification.