The UK's competition watchdog, which is investigating investment consultants, has concluded that the industry does not fulfil one of its key functions of picking funds that outperform the market after fees.

The companies operating in the industry are incredibly powerful as they oversee the vast majority of allocations to fund managers of assets worth around £1.6tn in the UK alone. The damning verdict strikes at the heart of consultants' business model, as reviewing and recommending fund managers to pension funds and other big investors is the centrepiece of what they do.