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FCA: How we assess competition


The Financial Conduct Authority has set out how it will judge whether markets are competitive based on factors such as access to financial services and the adverse effects of regulation.

In a paper today setting out the FCA’s objectives, the regulator says it will look at a number of factors when assessing whether market competition is working well for consumers.

These include market power held by providers, low switching rates, and why consumers do not buy certain financial products. The FCA says too little product take-up could reflect problems with access to financial services, lack of consumer awareness, unsuitable products or anti-competitive restrictions on product availability.

It also cites existing regulation, such as where regulatory measures make it more difficult for firms to enter and grow.

Where the FCA thinks it needs to intervene, the FCA will carry out a detailed market study to analyse market competition. The study will set out the regulator’s “theories of harm” on the potential negative effects on competition and the regulator’s rationale for getting involved.

If it finds competition is not working well, the FCA can make policy changes, take enforcement against specific firms, and publish guidance. It has also suggested proposals for better “self-regulation” by the industry, though has not expanded on how it would use this power in practice.

The FCA says it will also work with the Office of Fair Trading to examine a market, and will flag any evidence that a cartel is involved to the OFT.



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. The Grey Defector 24th July 2013 at 1:07 pm

    Better check out the biggest cartel of the lot

    FCA/FOS/FSCS/MAS/HM Government

  2. Beat me to it TGD!
    They will expect us to pay for this never ending round of initiatives, which keeps them in their ivory tower.
    Whatever problems they find, you can be sure none of them will be of the FCA’s making.

  3. They’ll be starting with the positive/negative impact of RDR then? I also suggest they first put their own house in order then worry about the rest of us.

  4. Are we really going to have a bunch of civil servants who haven’t done a day of profitable work in their lifes telling the private sector about competition? what a complete joke!

    They are going to tell everyone whether market competition is working after having just wiped out a massive part of the Financial services industry – not that taking the banks out of giving advice is a bad thing!

    And they are going to look at whether a product is suitable due to customer take up – PPI anyone? That was taken up by a lot of people so must be a good product. And at the same time the FCA will be heavily recommending investing in Keydata and Arch Cru as these were obviously quality products.

    Regulate dont stipulate.

  5. How about comparing why it takes 15 minutes to make a compliant 3500% APE pay day loan and 3 hours to do a £50 pm savings ISA on an advised basis.
    Both are regulated, one destroyes wealth and one created wealth.
    Which product has the greatest potential consumer detriment? Which product requires the greater regulation?

  6. RegulatorSaurusRex 25th July 2013 at 9:51 am

    I’m extinct, you can all see why!

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