Investment consultants investigation concludes

First published by Author on June 20, 2019 in the following categories: Industry Investigations and tagged with advertising | cma | incentives | investigations

The Competition and Markets Authority (CMA) has issued a final order in the investment consultants investigation that’s been ongoing since 2017.

The final step in the reforms that the CMA has been pushing forward has been put in place with the aim or improving the sector on the whole. Clearer information is now to be provided for customers who can enjoy better knowledge about the value for money they can get. There are also greater incentives for pension scheme trustees to shop around for better deals.

The aim, of course, is to ensure that consumers can get best value for their money. The order made is legally-binding, and is designed to ensure that pension trustees make better decisions for the retirement assets they manage.

Order made in the investment consultants investigation

A final order has been made as part of the CMA’s investment consultants investigation that was initiated way back in September 2017. The CMA has confirmed that the gist of the order is to ensure the following:

• Competitive tenders must be run for investment decisions to ensure a best deal can be selected from a number of fiduciary management services, as opposed to just using the one (which was found to be common);
• More information must be provided to potential new customers to allow for them to better compare service providers;
• More information must be provided in relation to fees for existing clients.

There’s now a period of six months for those involved in the sector to get their houses in order to comply with the changes.

Why this is an important investigation

The conclusions and the order made in the investment consultants investigation is incredibly important. The scale of this particular sector – with assets managed worth around £1.6 trillion – is an important one when it comes to ensuring it is effectively managed.

And we’re talking about people’s livelihoods here; the money they will rely upon when they reach retirement.

The Chair of the investigation, John Wooten, 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.”