The Pensions Regulator (the Regulator) has launched a consultation on, guidance on engaging with investment consultants and fiduciary managers. This follows a Competition and Markets Authority's (CMA) investigation into the area.
The CMA found low levels of tendering when first moving into fiduciary management. They noted that it was difficult for Trustees to access and assess the information needed to evaluate the quality of their existing investment consultant. In addition the costs of switching out of fiduciary management were high and there was a lack of cost transparency.
New duties for trustees have been introduced by the CMA from 10 December 2019, including:
The DWP is currently consulting on bringing these new duties into legislation, after which the Regulator will be tasked with regulating compliance with the requirements. The DWP consultation can be found here and closes on 2 September 2019.
Comment:Trustees are increasingly considering entering into various types of fiduciary arrangements, to reduce the investment governance burden. Trustees need to ensure there is sufficient oversight and monitoring of fiduciary and consulting arrangements, as it is Trustees who are ultimately accountable for the arrangements.
Responses to the consultation on the draft guidance must be submitted by 11 September 2019. Full details on the consultation can be found here .
If you would like advice on your scheme’s governance issues, please contact your usual Crowe contact.