The Society of Pension Consultants (SPC) commended the Financial Services Authority’s 2006 risk outlook, but has cautioned that it must not lead to more regulation in the already over-regulated pension arena.
“FSA has suggested that trustees are becoming over-reliant on their consultants,” said SPC Secretary John Mortimer, in a briefing for the SPC’s financial services committee. “Given the increased complexity and pressure of their position, trustees will often view it as essential, or indeed feel duty-bound, to seek and to follow specialist advice.”
FSA also commented on the concentration of investment consultancy among a relatively small number of firms and the fact that some consultants advised both pension funds and asset managers.
“Myners looked into concentration in the investment consultancy market and concluded that, while there was concentration, this was not due to market failure but to the fact that the services offered are specialized and relevant to a relatively small number of users,” Mortimer points out.
While the FSA fear conflicts of interest between consultants advising both asset managers and pension scheme trustees, Mortimer does not think this conflict will flair up often and when it does, trustees can handle them.