Consider the following news: last year, Brown Brothers Harriman was appointed custodian to the £100m (&euro156m) Portsmouth Water Company pension scheme. A spokesman for Portsmouth, a former Lloyds TSB client, explained: 'We are a small fund and most companies showed little enthusiasm in being custodian for the scheme. Brown Brothers Harriman was pretty much the only one that demonstrated any enthusiasm for our scheme.'

Brown Brothers, which has not previously been known for its affection for small UK pension schemes, says that it takes a pragmatic approach to each opportunity and judges each on its merits. Surprisingly, some other custodians have recently started to demonstrate equal flexibility, despite dire warnings that smaller pension funds, especially local authorities, would suffer after Lloyds withdrew from the business. Reports suggest that there is now a much healthier list of custodians willing to bid for these mandates and that some contenders are pricing very aggressively.