The Financial Conduct Authority (FCA) has announced plans to launch its first wholesale market study into investment and corporate banking. Its aim is to assess whether competition in the sector is working properly.
This announcement follows the publication of its review into competition in the wholesale sector, which found that limited clarity over price and quality of services may make it difficult for clients to assess whether they are getting value for money, and that 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.
Christopher Woolard, director of strategy and competition at the FCA, said:
“We have chosen this particular area because the benefits of effective competition in the market 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.”
He added: “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.”
Terms of reference for this study will be published in the spring, and will be informed by views from industry, trade bodies and clients. Feedback received to date has included concerns around transparency, conflicts of interest and the impact that bundling services together has on competition, including new firms’ ability to enter the market.
The FCA will consider undertaking a market study into asset management and related services later in the year.