22nd May 2015
The City watchdog will use its new competition powers for the first time to probe banks and see whether they are providing value for money.
In February the Financial Conduct Authority (FCA) raised concerns that customers may not be getting the best value from wholesale banking services, a sector worth £10 billion.
It will now use new competition powers to look into the primary banking services, particularly the ‘primary market’ where companies issue bonds and shares to raise money, which they then use to expand or acquire other companies.
The study will focus on ‘choice, transparency, bundling and cross-subsidisation in debt and equity capital markets, mergers and acquisitions and acquisition financing’.
It will also look into linked businesses, such as corporate lending and broking.
Christopher Woolard, FCA director of strategy and competition, said: ‘We want to see a sector that benefits the real economy by helping businesses of all sizes access capital.
‘That means offering real choice, transparency, and good service at every level. It is also essential that the regulatory framework encourages competition, and we will engage with banks, advisers, clients and investors throughout the review to assess which aspects of the market work well, and identify areas for improvement.’