Investment Consultants who advise pension schemes how to invest may face a full-blown competition probe, after coming under fire from Britain's financial regulator. The said industry was prone to conflicts of interest and charged opaque fees. Little known outside the pensions and insurance industries, investment consultants play a hugely influential role advising where trillions of pounds worth of people's savings should be invested.

But the Financial Conduct Authority said the largely unregulated sector is too ready to accept hospitality from asset managers, and provides the schemes they advise with little information on whether they get value for money for the fees they pay.

The consultants, typically hired by companies to choose their asset managers, have grown in power in recent years. They offer advice to the institutions - mainly pension funds, insurance firms and charities - which in 2015 accounted for around 3 trillion pounds ($3.7 trillion) of the 7 trillion pounds overseen by the UK asset management industry.

The three largest consultancies in the industry in Britain are Aon, Willis Towers Watson and Mercer, which between them take in 60 percent of the sector's revenues.

In interim findings published after a year-long review into the asset management sector, the watchdog said there was a culture of investment consultants accepting gifts and invitations to sporting and cultural events from asset management companies. That could influence the "ratings" they then give to managers, it said. It did not identify individual firms.

As well as helping clients pick which asset classes and funds to invest in, many consultants now also offer to invest the money themselves.

This move into so-called 'fiduciary management' can mean consultants are in direct competition with other managers they are hired to independently assess, a conflict of interest the regulator has threatened to refer to the anti-trust regulator.

As there is no benchmarking of fiduciary management, it is not always easy to compare one fiduciary manager's performance with another, and pension funds often feel more comfortable with an investment consultant they know, said Ros Altmann, an independent pensions expert and former pensions minister.

More than half of defined benefit pension funds using fiduciary managers chose the fiduciary arm of their existing consultant, according to a survey cited by the FCA, while 75 percent of new fiduciary mandates in 2014 were awarded without a fully competitive tender, with investment consultants getting the bulk of them.

Consultancy firms acknowledged that the potential existed for conflicts of interest, but said they acted to prevent them.

Willis Towers Watson said it had "long been a vocal supporter of increased regulatory oversight of the investment consultant industry".

A spokesman for Mercer said the company had not yet fully considered the report. "However, we do remain supportive of the FCA's aim to ensure that the asset management sector works well and delivers value for money for customers."