CMA publishes Investment Consultants Market Investigation Final Report

CMA publishes Investment Consultants Market Investigation Final Report

The Competition and Markets Authority (CMA) published the final report covering its market investigation into the investment consultancy and fiduciary management markets in the UK on 12th December 2018.

The market investigation has been an exhaustive and comprehensive undertaking that has been helpful in dismissing myths and misconceptions about the industry. The report puts the industry on a strong footing for the future and endorses the value of both investment consulting advice and implementation through fiduciary management.

Overview of the report

The CMA’s final report recognises the vital role that investment consulting and fiduciary management providers play in the evolving UK pensions landscape and brings welcome clarity for clients and providers. In particular, the CMA’s The key findings from the final report reflect that:

  • the vast majority of clients are satisfied with the service they receive
  • there are tangible benefits for investment consulting clients who choose to purchase fiduciary management services, conflicts of interest are well-managed and there is no evidence that investment consulting firms are seeking to introduce fiduciary management services that are believed to be against clients’ interests
  • barriers to entry and expansion in the investment consultancy and fiduciary management markets are not significant and, with a growing number of providers, the markets are not highly concentrated.

However, the CMA has concluded there are some market features that impact competition in both the investment consultancy and fiduciary management markets and which may lead to customer detriment. These features include:

  • a low level of engagement by some pension trustees in choosing and monitoring their fiduciary management provider
  • difficulty in accessing sufficient information on the fees or quality of investment consultancy and fiduciary management providers to judge if they’re getting a good deal from their existing provider.

In response, the CMA has announced a package of measures to drive further competition, improve levels of pension trustee engagement, and to enhance transparency and service quality across the markets. An order will be published which will:

  • Oblige pension scheme trustees to conduct a competitive tender process exercise, when purchasing fiduciary management services (above a minimum 20% threshold of scheme assets) for the first time. Trustees who have already appointed a fiduciary manager (above the threshold of 20% of scheme assets) without running a tender process must also put the appointment out to tender within five years of the appointment or within the next two years if the initial appointment was made over five years ago. The Pensions Regulator will issue guidance to support trustees running competitive tender processes. 
  • Require pension scheme trustees to monitor their investment consultant’s performance against a set of strategic objectives. 
  • Require enhanced disclosures from providers to clients covering areas including fiduciary management fees, together with standardised reporting of past fiduciary management performance. 
  • Establish minimum standards for how providers report the historical performance of recommended asset management products or funds.
  • Require providers to separate marketing of their fiduciary management services from their investment advice and to inform clients of their duty to tender in most cases before buying fiduciary management services.

In addition, the CMA has recommended that more of the activities of investment consultants should fall within the scope of regulation by the Financial Conduct Authority and that The Pensions Regulator should be tasked with oversight of the remedies impacting pension scheme trustees.

Next steps

The CMA will publish its order detailing the measures within six months of its final report (extendable for four months if there are special reasons) and has indicated that it will be consulting on the contents of the order in early 2019. It is expected that the measures will take effect later in 2019 although the precise timings are not known at this stage.

If you have any questions about the CMA Market Investigation, please contact your Mercer consultant or email

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