Investment Consultancy and Fiduciary Management market investigation: CMA outlines Issues and timetable

In its first ‘market investigation reference’ ever, the Financial Conduct Authority (FCA) this month referred Investment Consultancy and Fiduciary Management to the Competition and Markets Authority (CMA) for an in-depth 18 month ‘market investigation’.

Following the FCA’s referral on 14 September 2017, the CMA published its ‘Issues Statement’ and Investigation Timetable on 21 and 22 September 2017 respectively.The FCA had reasonable grounds for suspecting that features of the UK markets for Investment Consultancy services and Fiduciary Management services restrict competition. As set out in its terms of reference, the CMA’s independent and thorough investigation covers the following two markets

• Investment Consultancy services: advising institutional investors (predominantly pension funds) and employers on their pension schemes; and
• Fiduciary Management services: making and implementing decisions for investors (including selecting funds in which to invest).
• The CMA’s concerns customers find it difficult to assess, compare and switch investment consultants, limiting the incentive such consultants would otherwise have to compete for customers;
• conflicts of interest as regards investment consultants reduce the quality and/or value for money of the services they provide to customers; and
• barriers to entry and/or expansion limit the number of challengers to pressurise established investment consultants to be competitive, leading to adverse customer outcomes.