The investment consultancy market faces a Competition & Markets Authority (CMA) investigation following a referral from the Financial Conduct Authority (FCA) over its treatment of older customers
In publishing its Occasional Paper, the FCA found that there are risks that their financial services needs are not being fully met, which can result in ‘exclusion, poor customer outcomes and potential harm’.
While older consumers are not necessarily vulnerable, they are more likely than other groups to experience vulnerability at some point, whether temporarily or permanently.
The CMA’s investigation will examine whether difficulties in customers’ ability to assess, compare and switch investment consultants mean investment consultants have little incentive to compete for customers, whether conflicts of interest on the part of investment consultants reduce the quality and/or value for money of services provided to customers and whether barriers to entry and expansion mean there are fewer challengers to put pressure on the established investment consultants to be competitive, leading to less choice for customers.
John Wotton, chair of the CMA investigation group, said: ‘It is extremely important that the investment consultancy sector works effectively for its clients, which include many of the UK’s biggest pension funds, and we want to ensure we are looking at the right issues. That is why we are urging people to get in touch if they have any evidence to share or views about whether these are the correct areas for us to be investigating.’
Linda Woodall, director of life insurance and financial advice at the FCA, said: ‘We hope that today’s paper will help drive further positive innovation in the interests of older consumers. Our findings highlight the extensive public policy challenge requiring action from firms, government, regulators and other parties to bring about improvements for older consumers who use financial services.’
The FCA’s Occasional Paper is available to read here.