CMA publishes final order on FM and IC remedies

The Competition and Market Authority (CMA) has published its final remedies into the investment consultant and fiduciary management markets, helping pension trustees to “make better decisions”.

The watchdog published its final order today, 10 June, which will legally require pension trustees to run a tender when selecting a fiduciary manager for more than 20 per cent of their assets, after its investigation found “significant competition concerns”.

Trustees, fiduciary managers and investment consultants will now have six months to ensure they are acting within the CMA’s new order, or risk being taken to court.

Investigation chair, John Wotton, said: “Millions of people rely on pension scheme trustees to invest their savings effectively – which is why it’s so important that trustees shop around for the best deal for them.

“Our investigation found that many trustees lack the information needed to assess and compare investment consultants and fiduciary managers, meaning they may not be getting the best value for their members’ money.

“By putting the requirements of our investigation into law today, we will increase competition and make sure these markets work better for UK pension beneficiaries.”

The order will also require trustees who have already appointed a fiduciary manager for 20 per cent of their assets to run a tender within five years, while fiduciary managers will be required to provide more information on fees and performance to new and existing clients.

Trustees will also be required to set strategic objectives for the scheme, after the watchdog found that “below average” quality firms had higher market shares that “above average” quality firms.

In February, the CMA published a ‘Notice of Intention’ to make the final order, receiving 21 responses to the draft order.

Last week, The Pensions Regulator said it would be consulting on what guidance it should give to trustees on how to run a tender in the next few weeks, adding that it intends to “go further” than guidance on fiduciary management.

The consultation is expected to run for six to eight weeks, with a view to having the guidance in place by the end of 2019.

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