This post was written by Marjorie C. Holmes and Brett Hillis.
There is a financial Services Bill currently going through Parliament, which introduces a competition objective for the new Financial Conduct Authority (FCA) to implement as part of its general duties:
The matters to which the FCA may have regard in considering the effectiveness of competition in the market for any services mentioned in subsection (1) include –
(a) the needs of different consumers who use or may use those services, including their need for information that enables them to make informed choices,
(b) the ease with which consumers who obtain those services can change the person from whom they obtain them,
(c) the ease with which new entrants can enter the market, and
(d) how far competition is encouraging innovation[1].
The additional duties are not accompanied by new powers, so that the FCA will have to meet its competition objective by using its general powers.
As the FSA pointed out in their report “Approach to Regulation”, published in June last year:
“The FCA will need a sound economic understanding of the way relevant markets operate in order that its regulatory interventions will promote competition and will effectively address the problems identified. This requires an approach to financial services markets that is significantly different to that of the FSA, both analytically and culturally.”
Watch this space for further reports on how this bill progresses.
[1] Section 1E(2), Financial Services Bill, Part 2 – Amendments of Financial Services and Markets Act 2000
