Appointing investment consultants and fiduciary managers—the pensions requirements
Appointing investment consultants and fiduciary managers—the pensions requirements

The following Pensions guidance note provides comprehensive and up to date legal information covering:

  • Appointing investment consultants and fiduciary managers—the pensions requirements
  • Development of regulatory framework
  • Meaning of investment consultancy and fiduciary management
  • What are the requirements?
  • Who is exempt from the requirements?
  • Competitive tender process
  • Setting IC objectives
  • Enforcement and non-compliance
  • DWP regulations to bring the provisions of the CMA Order into pensions law

In the course of running an occupational pension scheme, scheme trustees may choose to appoint an investment consultant and/or a fiduciary manager. Unlike ‘fund managers’, investment consultants and fiduciary managers are not treated as ‘professional advisers’ under pensions legislation.

For more information on requirements relating to the appointment of professional advisers, see Practice Note: Appointing professional advisers and other pension scheme advisers.

Development of regulatory framework

Following a reference from the Financial Conduct Authority (FCA), the Competition and Markets Authority (CMA) carried out an investigation into investment consultancy services (IC services) and fiduciary management services (FM services) to pension schemes, publishing its final report on 12 December 2018. It found that there was a low level of engagement by trustees, a lack of clear and comparable information to assess value for money, and customers being steered by investment consultants towards their own higher-cost FM services, giving them an incumbency advantage.

Subsequently on 10 June 2019, the CMA published the Investment Consultancy and Fiduciary Management Market Investigation Order 2019 (the CMA Order) which imposes requirements on trustees of occupational pension schemes (among others) to address its concerns. For more information, see: What are the requirements? below.

The CMA also made several recommendations to the government and regulators, including a recommendation for:

  1. the DWP to pass the necessary legislation to enable the Pensions Regulator to oversee