Financial services firms will face increasing heat from the FCA next year and could be in line for big fines when the regulator takes over competition enforcement, Michael Wainwright has said.
The partner at law firm Dentons warned that stricter enforcement of competition has “already begun” with payment protection insurance fines doled out following a Competition Commission investigation.
He said: “The FCA is already investing heavily in preparation for taking on a wider remit on competition, which it is expected to do in April 2015.
“Its new competition mandate is not just about promoting competition, it will also gain powers to enforce competition and impose fines of up to 10 per cent of firms’ worldwide turnover - it could be very expensive for companies.”
Mr Wainwright warned that as a result of this change, competition regulation and the principles of competition law will be “increasingly important”.
Regulatory consultancy firm Bovill recently revealed the FCA had hired 30 new staff in its competition team in the past 12 months.
Research by the firm also suggested the regulator has already started to determine areas in which it suspects “flawed competition is leading to a raw deal for customers”.
Ashley Kovas, head of funds at Bovill, said: “This many new hires in the space of a year is the equivalent of a whole department in FCA terms.”
He added that most financial services groups considered the FCA to be “more aggressive” than the Office of Fair Trading, which used to hold many of the competition powers that the FCA will take on.
The FCA has confirmed it is currently investigating the cash savings market, income products offered to customers at retirement and aspects of the credit card market.
Adviser view
Patrick Connolly, certified financial planner at Bath-based Chase de Vere, said: “While the FCA is often criticised by our industry, we cannot overlook that it has a hugely important role to play to ensure the smooth running of the financial services industry and that the interests of consumers are best protected. As the responsibilities of the FCA continue to expand it is essential that they have adequate resources to do their job effectively.”
