In June 2019 the Competitions and Markets Authority (CMA) published its order which implements the remedies that were set out in the CMA’s final report, published in December following its investigation into the Investment Consulting (IC) and Fiduciary Management (FM) market.
The order confirmed that:
• Trustees wishing to appoint an FM for the first time for more than 20% of assets are required to run a competitive tender process.
• Trustees who have already appointed an FM without a competitive tender process for more than 20% of scheme assets, are required to run a competitive tender process within five years from the original appointment or by 9 June 2021, if later.
XPS Pensions Group’s Investment oversight team has developed what it called “a stream-lined and pragmatic approach to help trustees through either an initial selection process or mandatory re-tendering”.
It claims both options ensure trustees retain or appoint the right FM for their beliefs and for their scheme’s needs with a full review of commercial terms.
André Kerr, head of FM oversight at XPS Pensions Group, said: “We have spoken with a number of schemes that already use an FM arrangement and understand that the benefits to them of going through a re-tendering exercise will differ greatly, depending on their circumstances.
“Put simply, we believe that the approach that each scheme takes when undertaking a review of their existing fiduciary arrangement should be proportionate to their needs.
“Schemes will generally fall into one of two categories, either a streamlined review with a commercial terms refresh, or a full suitability review across all selection criteria.
“Either way, the benefits of complying with the order can result in greater efficiencies overall for schemes.”