The Competition and Markets Authority (CMA) is set to consult on the draft order of its suggested remedies into the investment consultant and fiduciary management markets in mid-February, it has confirmed.
Speaking at the Transparency Task Force Symposium today, 16 January, the CMA said that the consultation will run for three weeks, before finalising the order at the end of March.
The regulator said that is currently working on drafting the order, which will require pension schemes to run a competitive tender before choosing a fiduciary manager for more than 20 per cent of its assets, and if already delegated they must do so in the first five years.
Delivering an update on its progress since the publication of its final report in December 2018, CMA assistant director, Corina Donohoe, said: “We plan on having a public consultation on the draft order in February, and then afterwards we will work on a final order for the end of March.
“The reason why the timescale is tight is because we need to notify the European Commission, and give them sixty days to respond, on those remedies that go slightly beyond the current MiFid requirements.”
The CMA said it will make the order after it has received its response from the European Commission, before its statutory deadline on 11 June. The order would come into force six months after that in December 2019.
As well as the proposed remedies, the CMA made a recommendation to the Department for Work and Pensions to pass the required legislation to enforce the remedies, as well as recommending the expansion of the Financial Conduct Authority’s regulatory perimeter to capture the main activities of investment consultants.
It has also the CMA said it was working with The Pensions Regulator to give trustees guidance.
As well as the headline remedies, the CMA also said that investment consultancy firms will have to separate their fiduciary management marketing and advice to “remind pension scheme trustees of their duty to tender”.
Furthermore, the CMA confirmed that pension scheme trustees will be required to set strategic objectives for the scheme, after the watchdog found that “below average” quality firms had higher market shares that “above average” quality firms.
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