We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".


Improving the institutional investment chain

Twitter board

Follow us
  • My week on Twitter 🎉: 1 Retweet, 2.63K Retweet Reach, 3 New Followers. See yours with https://t.co/mCw3VcMQGw https://t.co/78tC0GzGXxyesterday
  • Our cover story: CDC: A step into the unknown. Is CDC an unnecessary policy change when effort would be better spen… https://t.co/QGHfTkiPP24 days ago
  • Newton – Trend Setting: The Year Ahead in ESG ''We have seen notable client interest for sustainable products over… https://t.co/OoXVLJ1BMp4 days ago
  • Our Latest ESG feature: EM governance: Breaking through. ''Those calling for better governance in emerging markets… https://t.co/qk0vJpfpJL7 days ago
  • The February Issue is available online now! Our Cover Story - CDC: A Step in the wrong direction. Read more here:… https://t.co/8xwHL9Nd2z7 days ago
  • RT @AonRetirementUK: What do we expect to see in the #ESG market over the next 12 months? Read the results of the @portfolio_inst panel of…7 days ago
  • RT @PensionsSion: What are the pros and cons of building a global #equity portfolio? Find out by reading the @portfolio_inst Global Equitie…13 days ago
  • RT @AonRetirementUK: Outcomes delivered by employer pension schemes now depend more than ever on levels of engagement. Companies must creat…14 days ago
  • Our latest Roundtable: Cash-Flow Driven Investing is now live! Read more here: https://t.co/zBy7Gbiud9 https://t.co/KJTIgVssmG14 days ago
  • RT @BNPPAM_COM: 2017 was one of the most active hurricane seasons on record, causing up to USD 475 billion worth of damage. What are the in…26 days ago
  • RT @PensionsTony: At the Aon London #pensions conference. About to start my workshop on how well #DC schemes are meeting the needs of #memb…26 days ago
  • Andrew Wauchope talks to Mark Dunne about charities and their pension schemes, the secret of being a good trustee a… https://t.co/xcdcxs61QL26 days ago
  • Enter the Dragon : China’s inclusion in the @MSCI_Inc Emerging Market index has caused little excitement, but, as L… https://t.co/oy0EdSI6A828 days ago
  • The @InvescoUKinsti whitepaper: Responsible investing and active ownership. Invesco’s Bonnie Saynay and Henning St… https://t.co/E3Gdh9eDSM33 days ago
  • Charlotte Moore looks at the reaction of financial markets to Brexit has already changed the shape of the relations… https://t.co/6KH9jnWTtq33 days ago
  • RT @AonRetirementUK: Want to know more about the benefits of factor-based investing for your DB pension scheme? Aon’s next Investment Break…34 days ago
  • Learn more about why everyone is talking ESG on our new ESG HUB, where we will be publishing our latest features pl… https://t.co/Dg9FiwCPCn35 days ago
  • 2018: The year of the human?. Cyber crime, greater disclosure, fixed income, people and, of course, climate change.… https://t.co/HMkzWcrFNy35 days ago
  • ''Building a global portfolio of equities could also provide much needed diversification'', discover why in our Glo… https://t.co/y90GhLlmCD35 days ago
  • What is your stance on executive pay? is bigger really better? Read more in our new ESG feature:… https://t.co/cUXMiCDuE560 days ago


Improving the institutional investment chain

Improving the institutional investment chain

Caroline Escott, Pensions and Lifetime Savings Association
Tuesday 17th October 2017

The UK investment management industry is the second largest in the world and manages approximately £1.9bn of assets on behalf of UK pension funds and their members. Given the sums involved, it is in the interests of the millions of people saving for their retirement that the asset management sector is competitive and offers good value.

Pension schemes are concerned about the potential misalignment of interests in the sector, an issue exacerbated by the lack of transparency on costs and charges. There was therefore widespread support for the FCA’s decision to conduct a market study of the asset management sector.

The FCA’s final report, published in June, provided little closure but did recommend a wide-ranging package of remedies to give protection to investors who are less able to obtain value for money; drive competitive pressure on asset managers; and improve the effectiveness of intermediaries including investment consultants and platforms. Perhaps the two most interesting proposals are those regarding investment consultants and scheme consolidation.

Alongside its final report, the FCA issued its provisional view, now confirmed, to refer the investment consultant sector to the Competition and Markets Authority (CMA) for investigation and reject the Undertakings in Lieu (UIL) presented by the three largest consultancies. Although the UIL contained many welcome measures this decision was one we supported because in our members’ view the referral to the CMA will lead to broader structural review and a chance to deliver the reform that we believe the sector needs.

On scheme consolidation, the FCA proposed that: “DWP continues to explore the possibility of Removing some of the barriers to pension scheme consolidation and pooling.”

The report argued that there was some evidence that smaller schemes are less likely to be able to exert pressure on fund managers, leading to poorer outcomes. This echoed the findings of the PLSA’s own defined benefit taskforce, which in its second report in March, and final report, published in late September, set out some of the possible cost savings and other benefits of scale for schemes from merging governance, administration, assets or a combination of the three.

This demand-side aspect is fundamental to improving the way in which the UK institutional investment chain works and only compliment other remedies such as better transparency and disclosure of fees. The FCA’s final report did not provide many definite answers, with several essential questions about the nature and structure of the UK institutional and retail investment markets still open for discussion.

Pension schemes have played a vital role in the work of the FCA so far, and it is important they continue to do so to ensure that the market works in the best interests of schemes and members who depend on their workplace pensions for a stable and security retirement.


Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!