Watchdog wants more competition among banks, market listing process

LONDON, April 13 (Reuters) - Investment banks should do more to encourage competition and fairer treatment of customers, Britain’s financial watchdog said, proposing changes to help firms to make informed choices about the banks they use.

In an interim market study published on Wednesday, the Financial Conduct Authority called for an end to certain contractual clauses that could limit clients’ choice of financial services providers in future transactions, such as initial public offerings on the stock market.

“These markets are a cornerstone of the real economy, helping companies raise capital for investment and expansion,” Christopher Woolard, director of strategy and competition at the FCA, said in the statement.

“Our study shows that many investment and corporate banking clients are getting a service they want, but we have also identified some areas where improvements could be made.”

The potentially anti-competitive practices flagged by the FCA included cross-selling, which it said could make it harder for banks that do not offer lending facilities to compete for other banking services, the FCA said.

It also said it found evidence that some banks might try to reward favoured investor clients when allocating shares in an IPO, and said it would carry out supervisory work “with a targeted group of banks” to understand how potential conflicts of interest are managed.

In the study, the FCA also highlighted concerns that league tables on investment and corporate banking services may be unreliable and could distort clients’ decision making. (Reporting by Carolyn Cohn, editing by Sinead Cruise and Jane Merriman)