UK Launches Investment Banking Competition Probe

By Max Colchester 

        LONDON--The U.K's financial conduct regulator on Thursday said it would investigate competition in the investment and corporate-banking sector following a series of complaints about a lack of transparency in the market.
        The Financial Conduct Authority said that it had received feedback from industry participants concerned about conflicts of interest and that bundling services together stifles competition. The regulator is talking to trade bodies and clients and will publish the terms of reference for the review in the coming months.
        "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," said Christopher Woolard, the FCA's director of strategy and competition.
        A number of themes were highlighted to the FCA for further investigation. These include how clients get good value buying asset-management services, the price of accessing data and a lack of transparency in investment-banking services.
        The review--the first of its kind for the U.K. regulator--will form part of the FCA's work with the Bank of England to review practices in the wholesale financial markets. The BOE launched a probe known as "The Fair and Effective Markets Review" following a series of scandals including the manipulation of benchmarks in interest rates and foreign-exchange markets. That review focuses on conduct in fixed income, commodity and currency wholesale markets.
        The latest FCA probe is potentially wider in scope looking at areas ranging from mergers and acquisitions to fund management.
        In April the FCA acquires new powers including the ability to fine financial companies for anticompetitive practices. Depending on what the FCA finds it could change certain rules or refer the investigation to the U.K.'s competition watchdog, a body which has the power to order the breakup companies if they are stifling competition.
        The FCA will also consider conducting a study into the asset-management industry.
        Write to Max Colchester at max.colchester@wsj.com
        (END) Dow Jones Newswires

        February 19, 2015 04:56 ET (09:56 GMT)

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