Britain's equity underwriting market is not working as well as it should and lacks effective competition on pricing, the Office of Fair Trading said.
The OFT said it was urging companies and institutional shareholders to apply greater pressure on equity underwriting fees after finding certain flaws with how the equity underwriting market operated.
The OFT added it had found that there had been a major increase in fees paid to investment banks since the start of the financial crisis.
"An efficient equity capital market is vital for the long-term growth of the UK economy.
"Our in-depth study has found that the market is not working well, with little effective competition on underwriting fees," Sonya Branch, OFT senior director of services and public markets, said in a statement.