NAPF welcomes Financial Conduct Authority’s wholesale sector competition review

The National Association of Pension Funds (NAPF) today (Thursday) has welcomed the conclusions of the Financial Conduct Authority’s (FCA) wholesale sector competition review 2014-2015.

Of particular note is the FCA’s announcement that it will consider initiating a market review of the asset management (and related services) sector later this year alongside its market review of the investment and corporate banking sectors which is due to start this Spring.

Will Pomroy, Policy Lead Corporate Governance, NAPF, said:

“The NAPF previously raised questions about the potential competition issues in the investment banking sector, particularly those that arise from cross-selling and the potential cross-subsidy of services. There is a sense that the opacity associated with the current system hinders effective competition and accountability to clients, resulting in reduced oversight and potentially higher costs for end investors.”

In its original submission to the FCA the NAPF raised concerns about aspects of the asset management market which included citing the prevalence of non-disclosure clauses in fund management agreements as unhelpful to the proper functioning of a competitive market.

The NAPF’s submission also drew attention to the issue of custodial services, an area with significant barriers to entry and an increasingly narrow range of providers.

Will Pomroy, added:

“It is crucial that pension funds, as clients of the asset management industry, are able to have trust in the industry and be able to assess whether they are extracting value for money from their agents in the interests of their members – future pensioners.

“Presently pension funds receive many ancillary services from a narrow pool of providers commonly bundled in with core custody services. This means it is often difficult for funds to assess whether value for money is being achieved. What is clear is that there is limited innovation and often insufficient focus on client needs in this sector, and to that end we welcome the FCA’s signal that it may take a closer interest in the competitive dynamics in this market.”

A copy of the NAPF’s original submission to the FCA’s Wholesale Sector competition review – call for inputs can be requested from the NAPF press office (contact details below).

Notes to editors:

The NAPF is the voice of workplace pensions in the UK. We speak for over 1,300 pension schemes that provide pensions for over 17 million people and have more than £900 billion of assets. We also have 400 members from businesses supporting the pensions sector.

We aim to help everyone get more out of their retirement savings. To do this we spread best practice among our members, challenge regulation where it adds more cost than benefit and promote policies that add value for savers.

Contacts:

Lucy Grubb, Head of Media and PR, NAPF, 020 7601 1726 or 07713 073023, [email protected]