On the go: The Department for Work and Pensions’ response to the consultation on trustee oversight of investment consultants and fiduciary managers has been delayed until 2022.
The document, published in July 2019, aims to amend current legislation to integrate an order produced by the Competition and Markets Authority into pensions law.
The proposed regulations will require trustees to carry out a tender process for fiduciary management services and set objectives for their investment consultants, while allowing the Pensions Regulator to oversee these requirements.
Until the DWP’s response is published — expected in the first half of next year — trustees must continue to comply with CMA’s 2019 order.
This is a legally binding order requiring investment consultants and fiduciary managers to provide clearer information about what their customers are getting for their money.
The order was the competition watchdog’s final step in its reform of the fiduciary management and investment consultancy sectors.
It encourages trustees to shop around to ensure they are getting the best deal for their schemes.
The CMA’s investigation found that many trustees failed to explore alternatives — using only the fiduciary management service offered by their investment consultants.
Under the CMA’s order, trustees who want to delegate investment decisions for 20 per cent or more of their pension fund assets are required to run a competitive tender when first purchasing fiduciary management services. They must invite at least three fiduciary managers to bid for their work.
Schemes that have already appointed a fiduciary manager for 20 per cent or more of their assets without a tender are required to put the service out to tender within five years.
