Study follows concerns that smaller firms are being pushed out of market
The UK’s Financial Conduct Authority (FCA) has said it will launch a study into competition in the country’s investment and corporate banking services sector, which serves as a focal point for investment banking worldwide, to assess whether the market is serving the interests of clients.
The announcement follows an FCA review of the wholesale financial markets that concluded the vagueness of service descriptions makes it hard for clients to judge their quality and cross-selling of services is working to prevent smaller firms from becoming established.
These conclusions will represent key areas of focus for the new study, with the terms of reference to be announced in the coming months, the FCA says. The upcoming review will also seek input from trade bodies, clients and companies.
‘We have chosen this particular area because the benefits of effective competition in the market could be significant,’ says Christopher Woolard, director of strategy and competition for the FCA, in a press release. ‘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.
‘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,’ Woolard says.
The FCA also plans to review the asset management sector later this year after contact with people and firms in the sector raised the question of ‘how purchasers get value for money when buying asset management services.’
The FCA’s drive to protect users of investment services has already left an impression on the investor relations industry. Last year, the regulator banned the use of equity dealing commissions to pay for corporate access, prompting asset managers, brokers and companies to review how meetings are set up between issuers and investors.
