FCA launches competition investigation into investment banking

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The UK’s financial regulator will start an investigation into whether there is sufficient competition in the investment and corporate banking sectors.

The Financial Conduct Authority announced it was launching an investigation on Thursday, the FT reported, after a previous review found that both sectors had limited clarity on the price and quality of their services, meaning that clients were finding it difficult to assess whether they were getting value for money.

Investment banks often ‘bundle’ certain services, which could mean that clients do not get the full picture of what they are being charged and why, the FCA said. The regulator is also planning to dig into whether new companies are prevented from entering the market.

The FCA will inherit new antritrust powers for banking at the beginning of April, meaning that the financial regulator will be able to fine companies for engaging in anti-competitive practices, and if it finds competition being stifled, can refer whole markets to review by the Competition and Markets authority.

The CMA has already launched a review of competition into banking current accounts and lending to small businesses.

The FCA will also be launching an investigation into the asset management industry, which it says is too susceptible to possible insider trading and market abuse.

Terms of reference for the regulator’s studies will be launched in the spring.