A new report by the Competition and Markets Authority has been warmly welcomed by the Pensions and Lifetime Savings Association (PLSA) who represent over 1300 pensions schemes with more than 20 million savers. The report revealed that pension trustees often continued using an investment consultancy for fiduciary management even if a better deal was available elsewhere.
In the report, there were a number of recommendations made, including for The Pensions Regulator and the Financial Conduct Authority to be given greater powers to ensure that pension trustees and fiduciary management companies are subject to more accountability. Because of the investigations by the CMA, pensions funds will now be required, when appointing a management form for more than 20% of their assets, to competitively tender all fiduciary management contracts.
The Pensions and Lifetime Savings Association policy lead on investment and stewardship Caroline Escott welcomed the report: "We believe it is good practice for schemes to assess fiduciary managers before choosing one – especially as a fiduciary management arrangement can be difficult to unwind – and are pleased to see the CMA's remedies in this area.
"One of our members' concerns has been the potential for misalignment of interests between consultants and their pension scheme clients, so ensuring investment consultants have a clear separation between their investment advice and marketing of their fiduciary management services should be a helpful step in addressing potential conflicts.
"We believe the CMA's findings highlight the continued need to drive up standards of governance across schemes. We think this is best addressed by ensuring schemes are well-resourced and benefit from effective executive support, as well as a regulatory approach which more clearly focuses not just on processes but also on people."