Local Government Pension Schemes (LGPS) will no longer be exempt from the Competition and Markets Authority’s (CMA) reform of the investment consultant and fiduciary management markets following “subtle changes” to the final order.

In the final order, published on 10 June, the LGPS was included in a list of schemes the order now applies to, despite not being included by the initial draft order.

The change means that LGPS now has until 10 December 2019 to comply with the order, requiring them to set objectives for investment consultants which are “closely linked” to the fund’s investment objectives and which need to be reviewed every three years.

The order stipulates the ‘pension scheme trustees’, whose definition now includes LGPS Committees, will now be required to set such objectives.

According to Hymans Robertson, setting clear objectives with an alignment of appropriate resources will lead to “conditions of longer-term success”.

The consultancy added that the order could have wider reaching implications as a significant part of the order is focused on fiduciary management services.

“This raises the question as to what is deemed to be a fiduciary relationship and how might some of the new LGPS pooling arrangements be viewed,” it said in an update.

“The order may also impact what advice is now deemed to be regulated and therefore the requirement for Funds to take regulated advice. It will be important that Funds are able to evidence they are taking proper advice and that those giving the advice have appropriate regulatory authorisations where relevant.”

It added that schemes should consider setting objectives for all key service providers.

The Pensions Regulator said it will be publishing a draft consultation which will deliver trustee guidance on the order, including other requirements which mean they will have to run a competitive tender for fiduciary managers.

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