The UK’s markets watchdog has set out the issues it will focus on in its investigation into investment and corporate banking competition.
The Financial Conduct Authority will examine the cost of equity and debt underwriting as well as how banks bundle services together, the regulator said in a statement published on its website on May 22.
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.”
It will be the first time the FCA will use its competition powers to check whether customers are getting adequate choice and value for money in wholesale banking services.
It follows an announcement in February that the FCA had concerns that customers may not be getting value for money from wholesale banking services, a £10bn sector.
“The market study will examine whether there are areas of investment and corporate banking services where competition may not be working well,” the FCA said in a statement.
“We have heard concerns from issuing clients and investors subscribing for an allocation that when issuing debt or equity issuing, banks may favour certain investors.”
It will also look at whether customers have enough choice of banks, and the impact of syndication or when a group of banks underwrite the issue and sale of a bond to investors.
The watchdog expects to publish interim findings and any proposed remedies at the turn of the year ahead of a final report in spring 2016.
It said if it finds competition is not working well it could introduce new rules, publish guidance or propose enhanced industry self-regulation.
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