Aon, Mercer and Willis Towers Watson have renewed criticism of the Competition and Markets Authority (CMA) over its analysis of the benefits of tendering for fiduciary management contracts.
The investment consultants and fiduciary managers - often considered the ‘big three' - have rejected the competition watchdog's latest findings, published last month, that conducting a competitive tender exercise can cut fees by 22%.
While Mercer said the updated working "appears persuasive evidence" at the headline level, it added the data used is not representative of the fiduciary management market and should therefore "not be used to justify a mandatory regime".
In further evidence to the CMA, the consultant noted that just 20 clients are included in the analysis' benchmark group of those that have conducted a formal tender. This is just 3% of more than 700 fiduciary management clients as of 2016.
Similarly, a paper, prepared for Aon by RBB Economics, added the analysis was "presented selectively and is not robust", arguing the baseline model included "arbitrary changes" to attempt to "improve the level of significance" of its findings. In a separate paper, Aon itself said there was a "lack of persuasive evidence" that more engaged schemes get better outcomes.
And Willis Towers Watson also came to the same conclusion, arguing the results were "not robust to small changes in approach" and rely on an "artificially narrow and counterintuitive measure of scheme ‘engagement'".
It added the CMA's findings were "dependent" on a range of sensitive variables or separate analyses - leading, in some cases, to "likely bias in the results".
All three are now disputing the need for mandatory tendering of fiduciary management contracts.
In its response, Willis Towers Watson warned the proposed remedy could result in "unintentionally creating additional barriers to the uptake of fiduciary management services" in terms of both cost and difficulty, particularly for smaller schemes.
Aon said the watchdog had "not met the necessary threshold" to prove the remedy should be introduced - arguing the updated analysis "in fact weakens" this case, and "risks denying choice to customers".
Mercer went further. Based on its own analysis using the CMA's data, the consultancy argued "trustees do not achieve materially lower average prices if they run a formal tender", contradicting the watchdog. The consultancy did not, however, make public its analysis due to a confidentiality ring imposed by the CMA.
It also disputed the full spread of benefits that tendering for fiduciary management is mooted could bring, noting feedback from its clients included full tenders can be "long and ‘painful' exercises" and could act as a "distraction" from schemes' wider work.
The responses are the latest bout between consultants and the watchdog as it prepares to publish its final decision in the investigation before the end of the year. Mandatory tendering is just one of eight remedies it has proposed.
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