Former Allen & Overy solicitor and Law Society president John Wooton will chair the Competition and Markets Authority’s investigation into potential conflicts of interest in the investment consultancy sector, the terms of reference of which have been published today.
The investigation will examine whether difficulties in customers’ ability to assess, compare and switch investment consultants restrict competition, whether investment consultants have conflicts of interest that deliver sub-optimal outcomes and whether barriers of entry to the market exist.
The other members of the investigating panel are Lesley Ainsworth who was a former partner at law firm Hogan Lovells, Bob Spedding, a former KPMG partner and charted accountant, and Tim Tutton, former director of UK water utility regulation at PwC.
The CMA says it proposes to survey trustees to understand more accurately the variations in experience, skills and background they have.
It may also conduct further extensive research into investment consultants’ ability to identify good managers. This would build on FCA findings that on average investment consultants are not able to identify managers that offer better returns to investors. The CMA says it may also examine the selection methodologies of investment consultants, whether their fees deliver better outcomes and quality fiduciary management services.
Submissions in response to the issues statement are invited in writing by Thursday 12 October 2017.
Wotton says: “It is extremely important that the investment consultancy sector works effectively for its clients, which include many of the UK’s biggest pension funds, and we want to ensure we are looking at the right issues. That is why we are urging people to get in touch if they have any evidence to share or views about whether these are the correct areas for us to be investigating.”