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UK pension schemes consultants face competition probe

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Staff Writer | November 19, 2016
Consultants who advise pension schemes how to invest may face a full-blown competition probe.
Britain   The Financial Conduct Authority plans to act
Investment consultants play a hugely influential role advising where trillions of pounds worth of people's savings should be invested.

But the Financial Conduct Authority said the largely unregulated sector is too ready to accept hospitality from asset managers, and provides the schemes they advise with little information on whether they get value for money for the fees they pay.

The consultants, typically hired by companies to choose their asset managers, have grown in power in recent years. They offer advice to the institutions - mainly pension funds, insurance firms and charities - which in 2015 accounted for around 3 trillion pounds ($3.7 trillion) of the 7 trillion pounds overseen by the UK asset management industry.

The three largest consultancies in the industry in Britain are Aon, Willis Towers Watson and Mercer, which between them take in 60 percent of the sector's revenues.

In interim findings published after a year-long review into the asset management sector, the watchdog said there was a culture of investment consultants accepting gifts and invitations to sporting and cultural events from asset management companies.

That could influence the "ratings" they then give to managers, it said. It did not identify individual firms.

As well as helping clients pick which asset classes and funds to invest in, many consultants now also offer to invest the money themselves.