Press Release
Pension Fund Advisers Must Be Open And Transparent
05 June 2008
Responding to The Pensions Regulator's consultation "Conflicts of Interest", IMA believes that all external consultants to pension fund trustees should disclose conflicts of interest. This will both aid transparency and enable trustees to make informed decisions.
Consultants to pension schemes can fulfil various roles, including offering fund management services. Consultants offering both fiduciary and commercial services have an obvious potential conflict of interest. In particular, where a consultant advises clients on fund manager selection and monitoring, there is a clear conflict if they are also promoting their own fund management services. For this reason, IMA believes greater transparency is needed.
IMA believes there should be a clear distinction between when a consultant is giving independent advice and when they are selling their own products and services. The consultant, like the fund manager should be required to identify conflicts, as well as manage and disclose information as a matter of obligation. Trustees should not be left to ask questions but should be given the necessary information to enable them to make the right decision.
Commenting, Richard Saunders, Chief Executive at the IMA said:
"Up to now there has been no oversight of investment consultants in areas such as how consultants recognise, manage or disclose conflicts of interest. This is in contrast to regulated financial services firms.
"It is therefore most welcome that The Pensions Regulator has taken the initiative to develop guidance for trustees to promote greater transparency and to assist well-informed decision taking. The IMA will be engaging further with this exercise in order to ensure that these objectives are met."
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