Short window of opportunity to submit CMA compliance statements

The window for pension scheme trustees to file their compliance reports on last year’s new fiduciary and investment manager competition obligations is now open.

But you need to act quickly: blink and it will be gone.

It was unbolted yesterday, and, to hijack a bit of common football transfer parlance, it slams shut again on 7 January 2021.

No idea what I am talking about? Allow me to refresh your memory.

18-months or so ago the CMA introduced several new requirements designed to ensure competitive processes for the supply and acquisition of fiduciary management (FM) and investment consultancy (IC) services to, and by, pension schemes.

The point was to encourage improved trustee engagement when buying FM and IC services, as well as to make sure providers offered up better and more comparable information on fees and performance.

The requirements applied to pension scheme trustees, FMs and ICs alike, and were set out in the Investment Consultancy and Fiduciary Management Market Investigation Order 2019 (the Order).

Among other things, the Order requires that pension scheme trustees (with certain exemptions):

• delegating decisions for 20% or more of their scheme assets, must run a competitive tender when first purchasing FM services; and
• who have already appointed FMs for 20% or more of their scheme assets without a tender, must put the service out to tender within five years of the appointment.

Trustees were also prohibited from entering into a contract with, or from continuing to obtain investment consultancy services from an IC unless they had set them strategic objectives.

FMs themselves didn’t escape: they must now provide additional information on fees and performance to both potential new and existing clients, allowing trustees to compare service providers more easily.

Those in scope of the Order’s new requirements had until 10 December 2019 to get their ducks in a row.

A year on, the time has come for trustees to submit a statement reporting their compliance during the first reporting window (10 December 2019 – 9 December 2020), and the statement must be accompanied by a compliance certificate in a form prescribed the Order. This must be signed by a director of any sole corporate trustee, the chair of trustees or, if there is no chair or the chair is unavailable, any other trustee.

2020 has been a year like no other, and with everything that has happened this requirement could easily slip under the radar.

But having worked so hard to meet last year’s deadline, it would be a shame to let all that good work go to waste.

The first week in January might seem a long way off, but in reality it isn’t. And given the holidays are rapidly approaching, you really should try to tie this up sooner rather than later.

If you haven’t done so already, may I politely suggest that you pick up the phone to your advisers?

Be sure to double-check exactly what needs covering – we understand that the CMA expects trustees to report compliance with the Order in relation to both the requirements for FMs ICs, even where they do not have such advisers in place.

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