Trustees and campaign groups in association with ShareAction have written to the UK’s HM Treasury urging it to expedite plans to regulate all activities of investment consultants.
In a letter addressed to Gryneth Nurse, the Treasury’s director general for financial services, Catherine Howarth, chief executive officer of ShareAction, said she would “greatly value” the opportunity to meet with the Treasury and discuss the need for the regulation of investment consultants.
The letter was backed by the Association of Member Nominated Trustees, the Financial Conduct Authority (FCA), Pensions for Purpose, Make My Money Matter, Carbon Tracker, Green Alliance and Seefair.
It highlighted that at various times over the last 10 years the FCA, the Competition and Markets Authority (CMA) parliamentary committees and other interested parties have called for investment consultants to be brought within the FCA’s regulatory perimeter.
The calls for regulation back as far as the Law Commission’s review of fiduciary duties of investment intermediaries of over 10 years ago, which noted concerns over pension trustees relying too heavily on investment consultants. It said at the time that “the lack of regulation of investment consultants does appear anomalous, and we would ask that the government actively monitor the [industry]”.
CMA also conducted a market investigation and published a 440-page report in 2018. It found numerous concerns and implemented a package of eight remedies to address the adverse effect on competition that it had identified.
In addition, the CMA stated that to support these remedies it was making four recommendations to government and regulators, including that “HM Treasury should pass the necessary legislation to extend the FCA’s regulatory perimeter to include all of the main activities of investment consultants”.
The FCA supported the recommendations to extend its perimeter to capture the full scope of investment consultancy services and the government said it would “consider these recommendations and consult in due course”.
Most recently, in May this year, former pensions minister Paul Maynard confirmed the treasury is expected to consult on the recommendations.
However, the letter from ShareAction noted that since then the HM Treasury has not progressed work on the expansion of the FCA’s regulatory perimeter.
Howarth is now urging the Treasury to expedite plans to regulate all activities of investment consultants.
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