LONDON (Reuters) – Poor competition in the market for advice to pension fund trustees has resulted in “substantial customer detriment”, Britain’s competition watchdog said on Wednesday.

UK pension schemes have total assets of 1.6 trillion pounds, and the Competition and Markets Authority (CMA) made site visits to the three major advisers: Aon (AON.N), Mercer (MERC.O), and Willis Towers Watson (WLTW.O).

Pension scheme are required by law to seek advice before investing, and the CMA found that half of them buy fiduciary management from the investment consultants they already hire.

The CMA said it found many pension trustees may not be getting the best value for money for their members at a time when many schemes have liabilities greater than their assets.

It announced a range of reforms to the investment consultancy and fiduciary management sector, saying it was vital that competition worked well.

The “remedies” set out on Wednesday, due to become legally binding by late 2019 after a public consultation, are broadly in line with initial proposals from the CMA in July.

They include mandatory tendering when pension trustees first purchase fiduciary management services, and a requirement on investment consultants to separate marketing of their fiduciary management service from their investment advice.

Mercer, Aon and Willis all said they welcomed the report’s findings. Ed Francis, head of investment, EMEA, at Willis Towers Watson, said he was pleased the final recommendations addressed its concerns after the initial proposals were made.

“For example, the tendering regime now being put forward no longer requires a fully open process, which will ensure it is not excessively onerous and costly to Pension Schemes,” he said.

Mercer’s UK Chief Executive, Fiona Dunsire said it had helped dismiss “myths and misconceptions about the industry”, while Aon’s global business officer and head of EMEA/APAC, Andy Cox, said it would improve outcomes for pension scheme members.

Andy Agathangelou, founding chair of campaign group the Transparency Task Force, said the report “adds up to a pragmatic, purposeful, proportionate and potent regulatory intervention”.

The CMA said trustees who have appointed a fiduciary manager without a tender must put the service out to tender within five years.

Fiduciary management firms must also provide potential clients with clear information on their fees, and show how they have performed for other clients.

The CMA said the government should give the Financial Conduct Authority powers to supervise the sector like asset managers.

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