The financial regulator has announced plans to launch a fresh probe into the investment and corporate banking sector.
The Financial Conduct Authority will begin a full investigation of competition following a review which found price clarity and service quality was limited, making it difficult for clients to assess if they are getting value for money.
It also found the “bundling and cross-selling of services could make it difficult for new entrants or smaller established firms to challenge established large players in the market”, it said today.
The FCA said the benefits of investigating the corporate and investment banking sectors with a view to creating more effective competition could be significant.
“The UK is a global hub for investment banking, and this sector plays a crucial role in our economy, helping companies raise capital for investment, expansion and funding ongoing operations,” said the FCA’s director of strategy and competition, Christopher Woolard.
“What was clear from the discussions we had with stakeholders and firms was that there are unanswered questions about potential conflicts of interest and value for money in this market. This will form part of our wider work in the wholesale markets, alongside the Fair and Effective Markets Review,” he said.
The regulator is seeking views from industry, trade bodies, and clients for the probe and has already met with 70 organisations and individuals during the wholesale review.
It heard feedback that included concerns over transparency, conflicts of interest and the impact of bundling services together on competition, including new firm’s ability to enter the market.
The review also raised other concerns which could also face further investigation by the FCA, and could include asset management.
It's the first time the FCA has had powers to investigate competition, and it will gain new powers of enforcement under competition laws, and will be able to refer markets to the Competition and Markets Authority (CMA),.
Last year it inherited responsibility for supervising all financial firms from the Prudential Regulation Authority (PRA).