Financial Conduct Authority seeks remedies in investment and corporate and banking market

Financial Conduct Authority seeks remedies in investment and corporate and banking market

The Financial Conduct Authority (FCA) has published a set of remedies following its investment and corporate banking market study.  The final report confirms the FCA’s findings that banks reduced their engagement with smaller and riskier clients, while the needs of larger customers were well served.

The final report reviewed a variety of evidence including restrictive contractual clauses, league tables, IPO allocations and fee structures and found concerns in relation to restrictive contractual provisions and league tables.

The FCA is now consulting on its proposed prohibition of future restrictive provisions which involve tying banks for the purchase of future services, as well as guidelines for the operation of league tables.

The FCA’s approach and findings echo those of the CMA in its recent investigation of the retail banking market, although the FCA has opted for less interventionist remedies motivated at trying to make it simpler and easier for customers to engage with financial services. 

The market study was launched in May 2015 shortly after the FCA obtained its new concurrent competition law powers which allow it to investigate possible breaches of competition law and refer markets to the CMA for a full market investigation.  When the FCA started this investigation it unleashed a huge data gathering exercise and this has not revealed major competition problems or deficiencies in the way that the wholesale markets are operating.

The deadline for comment on the consultation on restrictive clauses is 16 December 2016. It is expected that the FCA will announce rules for new contracts in early 2017.