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CMA findings into investment consultants

First published on FTAdviser: February 25, 2019 by Rory Maguire

We attended a Transparency Task Force event last month, where we again discussed the findings of the CMA report into investment consultants and fiduciary managers. We are of the opinion that where investment consultants advise clients and also provide investment services, there is a clear conflict of interest. The consultant is no longer providing independent advice if the same business is also providing (or could be providing) fiduciary services. We felt that such firms should be called ‘restricted’ (rather than ‘independent’) and that, like fiduciary managers, should have their investment consulting services up for tender every five years. We also felt that the firms (consulting and fiduciary) should be legally separate because Chinese walls can be porous. But none of these remedies formed part of the CMA’s findings, sadly, which was disappointing to us and we think creates poor outcomes for clients. We did mention this to the CMA. Clients, in our opinion, would be better served by independent advice and that remains our central view. On a side note, it was heartening to see investment consultants falling inside the regulatory net after this review. Fundhouse, as our clients know, has been regulated since 2015 and so it is good to see others becoming equally accountable for the advice they give their clients.

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