The FCA has said it is working with the Treasury and Competition and Markets Authority on how it can gain greater powers with regard to investment consultants.
The announcement comes after a recent CMA review into the sector found a “low level of engagement by some pension fund trustees in choosing and monitoring their investment consultant and fiduciary manager”.
The competition watchdog also found that “established firms which provide both investment consultancy and fiduciary management services have an advantage which can impede competition in the market”.
In a response letter to the CMA yesterday, the FCA’s strategy and competition director Chris Woolard says that the FCA plans to keep up its work to ensure clear and consistent reporting of asset management fees, and that the FCA supports the CMA’s recommendation to widen the regulator’s remit to cover the full scope of investment consultancy services.
Woolard writes: “We agree that due to the size of the market for investment consultancy services a small change in the quality of service provided could have a significant impact on savers’ retirement outcomes. We also note the broad support from across industry for an extension of our perimeter to capture investment consultancy services.
“Bringing investment consultancy services into our perimeter would allow us to consider future market developments which may affect pension savers. It would also allow us to consult on rules to incorporate the CMA’s remedies into our regulation of the sector.”