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Fiduciary news

One million words later…

Finally we have it – the Competition and Markets Authority (CMA)’s provisional decision in their investment consultant market investigation.

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by
Bob Campion

in Fiduciary news

22.08.2018

It has taken ten months, eight working papers, almost 200 industry submissions and hearings and – all told – more than a million words. But finally we have it – the Competition and Markets Authority (CMA)’s provisional decision in their investment consultant market investigation.

So does it live up to expectation – or is it a damp squib?

We invited a panel of leading experts to debate the CMA’s latest report and the response was overall positive.

The group felt the report was a good step in the right direct as it helped clarify what was expected from pension plans – and should lead to real benefits to them.  But there was concern over how effective some of the measures would be.

A crucial aspect of the CMA’s report is a concern over the practice of investment consultants ‘steering’ clients towards their own fiduciary management service. The key measure designed to address this is compulsory tendering for all new fiduciary mandates. 

But what makes a tender? More importantly what makes a good tender?

Might pension schemes go through the motions of following a tender process in order to satisfy the Regulator, without evaluating providers with a genuinely open mind?

And while it was judged that tendering would lead to a more effective process, few felt this would dent the strong incumbency advantage an investment-consulting fiduciary manager naturally possesses. It was also felt there could be a new breed of investment consultant developing.

The group felt all professional services should be tendered through a market review which is on balance a good way of choosing a supplier if run correctly.

Professional trustees may be in a position to run these reviews and some fiduciary managers were likely to benefit from the measures outlined in the report. The group did not believe the revenues of the major consulting firms would be damaged.

Overall the group was cautiously optimistic about the potential benefits of the report for pension schemes – but was undecided about how exactly pension funds would adopt the recommendations.

The panellists were:

Chris Atkin, Atkin Consulting
Kim Gubler, KGC associates
Donny Hay, IC Select
Nigel Jones, Broadstone
Dinesh Visavadia, Independent Trustee Services
Bob Campion, Charles Stanley Asset Management
Vicky Casebourne, Charles Stanley Asset Management

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