Trustees urged to act on fiduciary manager retendering amid capacity crunch fears

More than a third (38 per cent) of pension scheme trustees with fiduciary managers are planning to review their manager or test the market before mid-June, a poll from Hymans Robertson has revealed, prompting concerns over a potential capacity crunch.

The company warned that these schemes could be “running worryingly close to deadline” to comply with the Competition and Market Authority's (CMA’s) retendering ruling, which requires trustees to run a competitive tender process to recruit fiduciary managers.

In particular, it stated that the findings could suggest a "likely capacity crunch", where fiduciary managers would struggle to respond to all tender requests.

Considering this, the company has called on trustees to "act now" and place fiduciary management tendering at the top of their agendas over the next few weeks, in an effort to avoid a "stampede of market activity".

Hymans Robertson senior investment consultant, Samora Stephenson, emphasised that "time is of the essence", as it can take up to two months to run an effective tender process from beginning to end.

He stated: “Trustees who are compelled to tender their fiduciary mandates before the June deadline should be starting these exercises in the coming days or weeks.

"We really urge schemes to act now as not only will they avoid regulatory wrath but there is the risk that waiting longer could lead to disappointment because trustees’ chosen fiduciary managers may be too busy to participate in tender exercises.

"Ultimately, rushed tender exercises are less likely to yield good outcomes."

“The purpose of the CMA’s call to retender fiduciary management services was for schemes to not only demonstrate good governance but to ensure that fiduciary management provides value for money for the scheme," he added.

“As the deadline looms, this is a real opportunity for trustees to ensure they are getting the best from their fiduciary arrangements."

The findings also follow news of a delay in the government response to the consultation on trustee oversight of investment consultants and fiduciary managers until the first half of 2022.

Whilst no reason was given for the delay, trustees were told to continue to comply with the CMA final order until the consultation response is published.

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