UK watchdog says regulating pension fund consultants would contain risks better

Regulating consultants who advise pension funds would ensure greater focus on managing risks which can emerge from the sector, such as recent difficulties with liability-driven investment (LDI) funds, the Financial Conduct Authority said on Monday.

LDI funds, which help pension funds meet future payouts, struggled to meet collateral calls on their holdings of UK government bonds in September, forcing the Bank of England to step in to buy gilts.

"Perhaps if their advisers had been more sensitive to dealing with levels of stress like this, some of that risk would have been managed more effectively," FCA CEO Nikhil Rathi told parliament's Treasury Select Committee.