According to a report in the industry press, the UK's Financial Services Authority has warned that the UK pensions sector needs to be more alert to potential conflicts of interest resulting from the concentration of advisory and actuarial services in the field.

The report from Investment and Pensions Europe (IPE) is based on the FSA’s Financial Risk Outlook 2006 document, in which the FSA cautions on the dominance of a small number of advisory firms acting on behalf of the major UK pension funds.

There are concerns of potential conflicts of interest between pension fund consultants that offer services to both pension funds and asset managers.

Consultants, fund managers and trustees will all need to be alert to potential conflicts of interest, the authority said.

However the FSA told IPE that it has no plans to pursue the matter formally via an inquiry.

We are not an economic regulator and it is not our role to ‘deconcentrate’ the industry. However, we have identified this issue as a potential risk to market confidence, one of our statutory objectives, an FSA spokesperson told IPE.