Competitive processes are not providing customers with the necessary information to judge the value for money of investment consultants and fiduciary managers, the Competition and Markets Authority has said.
The CMA has published a consultative working paper seeking further input on its proposals to remedy the lack of competition in the advisory and fiduciary manager markets.
It suggests guidance materials for trustees to help them run better tender exercises. In tandem with this, companies responding to tenders could face guidance or minimum standards on how to provide comparable information in response to off-the-shelf requests.
It also proposes requirements on the frequency, format and content of fee reporting and standardised performance metrics, and wants to see stronger service quality metrics.
In its initial findings, the CMA said regular invoices and information are limited particularly among fiduciary managers.
"We believe it is important for trustees to have clear and accurate information on the fees that they pay throughout the value chain, and from the documents we have reviewed, fee transparency (particularly third-party fees) is in general below the standards which ought to be achieved through effective competition," it said.
While the Markets in Financial Instruments Directive II might change this, the CMA said it was too early to assess the effectiveness of new regulation.
For prospective clients, information on fees and performance tends to be poor in advisory tenders but better in fiduciary management, it said.
Comments on the CMA's working paper can be sent to investmentconsultants@cma.gsi.gov.uk by March 22 2018.
