Investment - Articles - Further industry comment on CMA investment reforms report


Comment from Aon, Willis Towers Watson, JLT and LCP on the CMA investment reforms report

 Tim Giles, head of Investment for UK & Ireland at Aon said: “We welcome the CMA’s final report on the investment consultant market. Throughout the process our focus has been on our clients and on gaining the best results for all pension scheme members.

 “We are already at the forefront of many steps being taken to improve transparency across all sections of the market. We firmly believe that these will ultimately improve outcomes for all pension scheme members.”
 
 Andy Cox, Global Business Officer and head of EMEA/APAC, Investment, at Aon said: “We are pleased to see that the CMA has maintained its view from its provisional findings that the investment consulting industry is a competitive market.

 “Our clients’ best interests have always been at the centre of our thoughts during this process and we believe that in the main the remedies will act to improve the market for both DB and DC schemes. We look forward to working with the CMA, FCA and TPR to ensure that client interest remains at the forefront of the implementation.”
  

 Ed Francis, Head of Investment, EMEA, Willis Towers Watson, said: “The CMA’s Final Report substantially follows the conclusions and recommendations set out in its Preliminary Report published in July. While we were broadly supportive of the preliminary recommendations, we continued to engage with the CMA in recent months to ensure the details of the remedies are sensible and proportionate for clients. We are pleased that the final recommendations have addressed many of the concerns that we raised; for example, the tendering regime now being put forward no longer requires a fully open process, which will ensure it is not excessively onerous and costly to Pension Schemes. The revisions to the tender regime mean that it should now not act as a deterrent to the take up of fiduciary management for those schemes that will benefit from that approach.

 “Overall the CMA has found an industry that is functioning well, does not have excessive concentration or high barriers to entry and where participants are seeking to serve their clients’ best interests. The very thorough process that the CMA has undertaken should give customers significant comfort that the industry is committed to high levels of transparency and well aligned to serve them effectively both now and in the future.”
  

 Mark McNulty, Head of Investment Solutions, JLT Employee Benefits, said: “It is positive to see no major revisions to the proposals in the Provisional Report and, critically, clarity on what is viewed as fiduciary management. It is, however, very disappointing that the CMA has provided no dispensations from the need for the tender requirements, even where the trustees are entirely satisfied with the current arrangements and have no intention of changing managers. This will result in wasted time and effort from all parties conducting tenders to comply without resulting in meaningful changes of provider. Confirmation that the FCA regulatory parameters will include all the main activities of investment consultants is to be welcomed.”

  

 Paul Gibney, Partner at LCP, said:“We consider a fiduciary management service to be a specialised form of asset management. LCP’s view is that trustees should treat the appointment and ongoing monitoring of a fiduciary manager as they would that of any other asset manager.”

 Paul Gibney added: “The CMA’s review challenges investment consultants to communicate more clearly to trustees what they do and why it is of value.”

 “The review also highlights that fiduciary management is not a natural extension of an investment consultancy service, but a quite different arrangement.”

 “The CMA has today effectively told UK pension scheme trustees to take extra care when appointing a fiduciary manager, and that they must run a tender exercise when first adopting a fiduciary management arrangement.”

 “We welcome the publication of the Final Decision Report. The CMA has conducted a thorough review of the investment consultancy industry, dedicating significant resource and effort to understand the market and its participants. Ultimately, the CMA’s scrutiny of investment consultants will improve the standard of service and will benefit pension scheme trustees and members.”
  

  

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