Competition law and financial services

The banking sector is particularly vulnerable to infringements of competition law given the small number of large banks with significant shares of the market and opportunities for collusion. For example:

In recognition of this, the Financial Conduct Authority is assuming ever greater competition powers.

Promotion of effective competition has been one of the FCA’s three statutory objectives since April 2013. In this regard, it launched a Wholesale Sector Competition Review in July 2014, to identify any areas meriting a more in-depth investigation by way of Market Study. 

Then, on 1 April 2015, the FCA assumed full concurrent powers alongside the Competition & Markets Authority (the “CMA”). The powers were conferred by the Financial Services (Banking Reform) Act 2013, and they enable to FCA to:

(1) Undertake Market Studies under the Enterprise Act 2002 where markets do not appear to be working well for consumers.


Pursuant to the Wholesale Sector Competition Review, the FCA launched Market Studies into investment and corporate banking (in May 2015) and into the asset management sector (in November 2015); although it chose to conduct both studies in its capacity as a financial services regulator under its Financial Services and Markets Act powers, rather than in its capacity as a competition regulator under its Enterprise Act powers.

(2)  Refer markets to the CMA for a full-on Market Investigation, which can lead to remedial action to increase competitiveness.

Indeed, on 6 November 2014, the CMA, of its own volition, announced a Market Investigation into retail banking in two areas – personal current accounts and services to SMEs – following Market Studies in those areas.

(3)  Investigate individual undertakings which may be infringing competition law by engaging in anticompetitive agreements or abuse of dominance.

The FCA’s concurrent jurisdiction may therefore lead to an increase in findings of infringements in the financial sector, with the possibility of follow-on actions by victims to recover their losses.

Other sectorial regulators have shied away from enforcement – as of August 2015, there had been only two infringement decisions by them: the Office of Rail Regulation against EWS in 2006 and Ofgem against National Grid in 2008 – but the FCA has recruited what is in comparison a large number of competition staff, which may indicate an intention for greater proactivity.

Furthermore, the Financial Services (Banking Reform) Act 2013 inserted s234K into the Financial Services and Markets Act 2000, thereby placing an obligation on the FCA to consider, before using certain of its powers as financial regulator, whether its competition powers are more appropriate and, if so, to use them instead.

The FCA has released Guidance on the use of these new competition powers.

Collyer Bristow’s Financial Services Disputes team has specialist competition law expertise to advise in these areas.




Additional information