The CMA produced its long awaited ‘Provisional Decision report’ this week (330 pages plus a 168‑page appendix).

In short, its key finding was that, whilst the market is not overly concentrated and hence uncompetitive, there are a few things that could be changed to make it more competitive. Some of these relate to the behaviour of investment consultants and fiduciary managers; most of them relate to improving investment governance generally. The CMA notes that more engaged trustees get better results. Or to put it another way – better governance gets better results – not a surprise to Muse of course!

So, what does the CMA say should be done? Improve governance by:

• compulsory tendering when appointing a fiduciary manager and compulsory retendering of some existing mandates
• forcing combined investment consulting and fiduciary firms to make it clear when they are pushing their own products
• introducing standards for performance reporting and more detailed fee breakdowns
• ensuring that trustees set clear objectives for their investment consultants

To help trustees, the CMA suggests that The Regulator should provide guidance on tendering and the FCA’s remit should be extended to cover more services provided by consultants and fiduciary managers.

The CMA has stopped short of forcing a structural change on the industry (for example outlawing combined investment consultants and fiduciary managers).

We think that the proposals are proportionate to the issues identified and, if implemented well, the governance enhancements should help to improve outcomes. Implementation will be key of course. In particular: any new tendering process must be robust. It must be a proper review and not simply become a ‘box-ticking’ exercise. Where existing mandates are being re-tendered, anything other than a proper review is likely to result in an FM provider’s unwillingness to participate. New performance and fee information also needs to be understood and used in the right way in decision making. The investment consultants themselves have a role in ensuring that their trustee clients have clear objectives.

A lot of trustees have, understandably, put off reviewing their investment arrangements in anticipation of the CMA review. The remedies being proposed do not appear to be too demanding for the industry overall and we expect them to be adopted. Trustees who were waiting for the outcome should therefore wait no longer; good governance dictates that action should take place now.

By SLAs, I mean time-based measures of a service providers performance. Of course, there will always be service level agreements in place, but it is telling that SLAs has become shorthand for the all-pervasive 5-day turnaround.

In administration, we have seen this changing. Qualitative measures are now included in more and more contracts and quantitative measures are now broader than just the time it takes to get a letter out the door. It now has to be right first time as well (although why that needs to be explicitly stated is still beyond us – does anyone ever want anything else?). We have also started seeing much more traction for end-to-end SLAs, which, admittedly is still a timescale, but is more representative of the member’s experience of the service. And there are some signs of more proactive management of member expectations at each stage of the process as cases are passed to actuaries and third parties for input.

However, I have been wondering lately, whether time-based SLAs are becoming entirely redundant. In a world where I can logon to my banking app with my fingerprint and send a payment anywhere in seconds, is it really right to be measuring a retirement quote in days? In an increasingly automated and self-serve world, does it still make any sense to measure performance in this way?

Of course, it is not always easy to throw away the comfort blanket. The Trustee still needs a quick way of measuring the performance, which tells them whether the administration is up to scratch or not. The more complex the measures become, the more complex the assessment of performance becomes. However, I thought I would throw a few different ideas out there for you to muse over:

• Targeted % of transactions/ calculation to be automated without need for manual intervention. Whilst this may exist at the outset of a contract, this should be maintained across the life of the contract and as the scheme and legislation changes/ evolves.
• A set % of transactions to be completed via self-service. It may take time to get there, but a concerted effort to drive interactions this way should bear fruit. This will ensure improvements in data quality, automation and engagement with the membership.
• Progress of project work, e.g. bulk exercises, benefit statement issue. Self-reported RAG analysis of these projects, which you, as the client, can comment on where you feel it does not meet the reality.
• Reporting on trends, e.g. in member queries (particularly those that fall into the bucket of the never really explained ‘general cases’), complaints, etc. This would be used to develop a programme of continuous improvement.
• Regular review on value for money – is your administrator providing good value to your members?
• Data management – some more creative thinking about maintaining quality data, i.e. quality of data received through interfaces, queries raised/ outstanding etc.

Clearly, these are not fully formulated measures that you can cut and paste into your contracts, but hopefully illustrate the point that there is more to administration than being able to confirm that a response was provided within five days! And we haven’t even mentioned risk…