The Competition and Markets Authority’s (CMA) will publish data on the performance of the asset managers that investment consultants (ICs) have recommended, as part of an eight-paper schedule of publications coming out over the next four months, an update from the watchdog confirmed today.
The CMA will between February and May publish working papers on eight areas of its investigation into the IC market prior to publication of a provisional decision report in July 2018. The CMA says it will continue to carry out detailed analysis on areas relating to its theories of harm and will make further data and evidence requests.
The CMA will publish working papers on:
- Analysis of the information on fees and quality of service that investment consultants (ICs) and fiduciary managers (FMs) provide to current and prospective clients.
- Analysis of the performance of ICs’ recommended asset managers. In this area, we expect a working paper to be accompanied by disclosure of some underlying data by means of a data room or enhanced confidentiality ring.
- High-level emerging thinking on market concentration and barriers to entry and expansion.
- Analysis of the potential conflicts of interest related to investment consultants’ provision of fiduciary management services.
- Its approach to measuring profitability, together with its emerging financial analyses.
- Analysis of the type and extent of trustee engagement (such as levels of monitoring, tendering, switching suppliers) which will draw on the results of its survey of pension scheme trustees.
- Competitive landscape which will set out its emerging analysis on market shares and market definition.
- Its emerging analysis of the gains from engagement, testing whether more engaged customers get better value for money or other benefits. This may be accompanied by the disclosure, by means of a data room or enhanced confidentiality ring, of supporting data.
The CMA says the papers will not indicate any provisional conclusion on adverse effects on competition (AECs) or remedies to address those, as those matters will be set out in the provisional decision report. But some working papers may provide its emerging thinking on potential remedies, if it were to find an AEC. This is to enable it to gather views and evidence on these potential remedies.
The CMA appointed IFF Research to survey trustees of UK occupational pension schemes as part of this investigation. The research gathered evidence on how pension scheme trustees use investment advisory and fiduciary management services and how they view these services. It will publish this independent survey alongside the working papers.
The body says it has no plans to extend its investigations beyond pension investments to other areas of institutional asset management. Its analysis of the revenues of investment consultants shows that other institutional investors represent just 6.5 per cent of their business and 9.1 per cent of the assets on which they advise.