Three global consultants have submitted a package of measures to the U.K.'s financial watchdog, outlining proposals to promote competitiveness and transparency in the investment consultant and outsourced CIO industries.
The submission by Aon Hewitt, Mercer and Willis Towers Watson, is in response to the Financial Conduct Authority's interim report of its ongoing Asset Management Market Study, published in November. The study in part outlined the FCA's concerns about the investment consulting market, its proposal that the market be moved into its regulatory scope, and also that it was considering a referral for investigation by the Competition and Markets Authority.
The package of “undertakings in lieu” addresses the FCA's concerns, said a joint statement by the three consultants. “The package has regard to review of services, transparency of performance and fees, and conflicts of interest and was prepared following the FCA's indication that it was open to considering UILs that would provide a comprehensive solution that is reasonable and practical,” the statement said.
“The FCA report asks whether greater asset pooling and integration can help pension schemes,” said Tim Giles, head of U.K. investment consulting at Aon Hewitt, in a separate statement from the consultant. “It can, and the opportunity for it to do so already exists, but innovative approaches are unjustly criticized by many asset managers because of the disruptive threat they pose.”
Ed Francis, head of investment for Europe, Middle East and Africa at WTW, said in a separate statement: “The U.K. investment consulting industry has led the way in the development of sophisticated investment approaches over many years. Recognizing the importance of the services we provide, and the complex issues they address, we support measures to improve transparency and accountability.”
Mr. Francis added that the specific measures submitted to the FCA for consideration would help all institutional investors “ensure they have the right provider, the right service model and the right information to judge the quality of our input. We believe their adoption by all firms operating as investment advisers or fiduciary managers will promote the continuation of healthy competition and strong outcomes for our clients.”
Further details on the UILs have not been released.