The UK’s Competition & Markets Authority (CMA) has proposed a series of reforms in the £1.6 trillion investment consultancy and fiduciary management industry after identifying lack of competition.

The move followed a probe into the sector, which launched in September 2017 at the behest of the Financial Conduct Authority (FCA).

The investigation revealed that half of pension schemes select the same provider as their fiduciary manager that they use for investment consultancy.

“This means companies which offer both services have an advantage over other firms, when it comes to getting this business from existing clients,” the competition regulator said.

Also, only a third of pension trustees were found to have a tender process during selection of investment consultants and fiduciary managers.

At the same time, the probe found pensions trustees having inadequate information about fees to ascertain if they are receiving a good deal from providers.

In order to address these challenges, CMA proposed the introduction of a competitive tender process for pension trustees choosing their first fiduciary manager and said that fiduciary managers should offer clarity on fees.

The watchdog also called for increasing FCA’s oversight of the sector. The final report is expected to be released on 13 March 2019.

CMA chair of the investment consultants market investigation John Wotton said: “We’re concerned that pension schemes are not currently putting pressure on the market to get the best value for money on behalf of their members. They may lack the information they need to compare competing offers and so could be sticking with their existing investment consultant or fiduciary manager when there are better options available.

“This is an extremely important sector that influences how well millions of people’s pension savings are invested, and it’s therefore vital we take steps to make sure that competition is working properly.”