The U.K. Financial Conduct Authority (FCA) on Tuesday published a set of reforms designed to enhance competition in the investment and corporate banking market.
Among other things, the FCA says that it will work with the industry to develop standards for underwriting league tables, in a bid to put an end to misrepresentation in banks’ pitches to clients.
It will also ask league table providers to revise their methodologies to prevent firms from engaging in transactions that boost their standings in league tables, even if they generate losses.
Additionally, the FCA will step up oversight of the initial public offering (IPO) allocation process, with a view to enhancing the fairness of allocations.
The U.K. regulator published a separate consultation paper on Tuesday that proposes measures to ban banks from using contractual clauses that limit clients’ choice in future transactions. The FCA expects to publish the final rules in this area in early 2017, and to publish a separate consultation paper on possible changes to the IPO process later this winter.
“The universal banking model clearly works well for a wide range of participants but areas such as the use of restrictive contractual clauses, league table credibility and the allocation of shares in IPOs are not always working as well as they could,” says Christopher Woolard, director of strategy and competition at the FCA, in a news release.
“We’ve developed a package of remedies designed to address these problems. This sends a signal that we expect firms to compete on the merits, not by restricting clients’ choice on future transactions, drawing misleading comparisons with competitors’ performance, or exploiting conflicts of interest,” he adds. “We are also continuing to look at how we can improve the IPO process.”