Mercer has accused the Competition and Markets Authority of using incorrect data and unrepresentative samples in its recent Investment Consultants Market Investigation.
This probe look at consultants offering investment and fiduciary management services to the £1.6tn pension fund industry.
But Mercer’s UK chief executive Fiona Dunsire claims the errors in this data analysis “cast doubt on the credibility of key aspects” of the CMA’s provisional decision report, published in the July this year.
These accusations come in a letter to John Wotton, the chair of this investigation, and published in today’s Financial Times.
In its provisional report CMA found evidence of an adverse effect on competition in the field of fiduciary management, that could cause “material customer detriment”.
As part of its provisional report the CMA had also recommended that The Pensions Regulator develop enhanced guidance for trustees on conducting competitive tender processes.
In the letter Dunsire says: “The conclusion [of an adverse effect on competition] is underpinned by the CMA’s data analysis. The most significant piece of analysis is the CMA’s work on gains of engagement – where it has provisionally found that less engaged schemes pay significantly higher prices than more engaged schemes, when they move into fiduciary management with their existing investment consultant.”
Mercer, she says has serious concerns about this data analysis: “These include the use of incorrect data, errors in the CMA’s analytical code, the reliance on unrepresentative samples.
“As a result the CMA’s data analysis on gains from engagement, and on the relationship between quality and market share is flawed…. and any calculations of customer detriment are not reliable.”
As a result Dunsire says there is “not an adequate evidential basis for the imposition of remedies in these markets”
Mercer has asked the CMA case team to issue a corrected version of this analysis, and offer other third parties an opportunity to comment on these revised findings.
The CMA is due to publish its final report in December, more than a year after it began its investigation into this sector. A spokesman for the watchdog said it: “This is an extremely important sector that affects how well millions of people’s pension savings are invested. It’s therefore vital we act to ensure that competition is working properly.”
It said it welcomed all feedback and would take this into account before publishing a final decision.
