Investment consultants slam the City watchdog for its proposed reforms in the sector

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The firms were giving evidence as part of the CMA probe (Source: Getty)

Investment consultants including Aon Hewitt, Mercer and Willis Towers Watson have hit back at the Financial Conduct Authority (FCA) over its plans aimed at increasing competition in the sector.

Willis Towers Watson, one of the three firms named by the FCA as potentially holding an excessive market share in the investment consulting sphere, said in a statement that “some views expressed by the FCA do not accurately reflect the market position”.

Read more:  City watchdog refers investment consultants for a competition investigation in the first decision of its kind

It refuted the FCA's position that many firms in its sector are “vertically integrated”, and can therefore ensnare clients by offering them service at every step of the advice-seeking and delegation process.

The firm instead said that services such as fiduciary management were more of an “extension” of investment advice.

Read more: The Financial Conduct Authority wants to reform the investment market with asset management shake-up

Willis added that “there are no material conflict of interest issues in the current model”, and that “client outcomes would be adversely impacted were this value-chain to be broken by a structural remedy”.

The outcry from firms follows the FCA's decision to refer the investment consultancy industry, which helps clients such as pension trustees make investment decisions, to the Competition and Markets Authority.

The FCA feared that pension trustees had little ability to assess the quality of the advice, and found it hard to compare or swap services.

Read more:  Competition authorities put transparency at the core of their probe into pension advisers

 

Tags: FCA