A group of fiduciary managers have launched a performance measurement standard to address criticism from investors and regulators that the industry lacks transparency.

IC Select, an independent body, received backing from 14 providers for the performance reporting standard. It used data from 520 pension schemes using fiduciary managers.

Aon Hewitt, Willis Towers Watson and Mercer – the three biggest providers of investment consulting and fiduciary services in the UK – have all agreed to report performance according to IC Select’s new guidelines.

Other providers backing the standard were BlackRock, Cardano, Charles Stanley, Goldman Sachs Asset Management, JLT Investment Solutions, Kempen, Legal & General, P-Solve, Russell Investments, Schroders and SEI.

The standard will be overseen by a 13-strong panel of representatives from industry bodies and professional trustee firms.

Peter Dorward, managing director of IC Select, said: “The new standard enables trustees for the first time to obtain consistent performance information when selecting a fiduciary manager. This will significantly enhance their ability to understand the differences between them.”

Dorwood added that the standard could be put to use in other markets such as the Netherlands, where fiduciary management was widely used. However, IC Select did not yet have the capacity to push its work beyond the UK, he said.

The performance standard gives guidance for fiduciary managers to construct “composite portfolios” that trustees can use to analyse and compare providers. The example portfolios would be composed as if the manager had full discretion over investment management and hedging.

However, IC Select said it opposed the creation of performance league tables based on the data its measurement standard would produce “given the wide swings of valuation that can result from rises or fall in interest rates and the limited value of such tables in forecasting future performance”.

Providers have been under intense scrutiny in recent months following a landmark study by the UK regulator. The Financial Conduct Authority (FCA) last year accused consultants and fiduciaries of weak competition and failing to manage conflicts of interest, leading to a referral to the Competition and Markets Authority (CMA).

Earlier this month, the CMA reported that there was evidence of pension scheme trustees being steered towards fiduciary services provided by their investment consultant. In addition, the competition watchdog said trustees lacked access to information “to judge the value for money of investment consultants and fiduciary managers”.

In connection with the launch of the standard, IC Select has appointed Donny Hay to lead business development. He was previously head of fiduciary management client relations at Kempen.

Hay said: “I have spent seven years working as a professional trustee at Law Debenture and PTL, as well as Kempen. The experience showed me that trustees need better guidance in deciding which fiduciary managers to pick and in judging their performance afterwards.”