UK: Watchdog cracks down on anti-competitive banking practices

Banks unfairly favour big fund managers when it comes to doling out shares in company listings and this must change, Britain’s Financial Conduct Authority said on Wednesday.

The watchdog’s findings are from a study that started in May into competition within investment and corporate banking, a sector that generated $17 billion in gross fees in the United Kingdom in 2014.

The regulator also wants to end contractual clauses that tie clients to a bank for a range of services. The study found cross-subsidies between corporate and investment banking lead to a bundling of services, where customers can end up using the same bank for several products.

“Our study shows that many investment and corporate banking clients are getting a service they want, but we have also identified some areas where improvements could be made,” FCA director of competition, Christopher Woolard, said.

“Overall, this is a package of proportionate measures intended to remove potentially anti-competitive practices,” Woolard said in statement.

The 186-page report starts a public consultation into changing how parts of the market work, such as the way companies are floated using initial public offerings.

Full Content: Financial Times

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