On 1 April 2015 the Financial Conduct Authority (FCA) obtained new concurrent competition powers under the Competition Act 1998 (CA98) and the Enterprise Act 2002 (EA02) for financial services in the UK. The Payment Systems Regulator (PSR) has also obtained competition enforcement powers for certain UK retail payment systems.

These changes are to some extent institutional in nature, as competition law already applies to all businesses in the UK, but now the FCA will have some significant additional tools at its disposal to detect and deal with competition law infringements which businesses should be aware of.  

  1. The FCA's existing competition powers
  2. The FCA's new concurrent competition powers
  3. How will the FCA exercise its concurrent powers?
  4. The PSR's concurrent competition powers

1. The FCA's existing competition powers

Since 1 April 2013, following changes introduced by the Financial Services Act 2012, the FCA has had a statutory objective and duty to promote effective competition in the interests of consumers in the markets for regulated financial services. This competition objective has operated alongside the FCA's other operational objectives of consumer protection and market integrity. To the extent compatible with these other objectives, the FCA has also been under a duty to carry out its general functions in a way which promotes competition.

Although this fell short of making the FCA a concurrent competition regulator, the FCA has had the power to request the Competition and Markets Authority (CMA) to consider whether a financial market has features restricting competition. The FCA has therefore had the power to conduct market studies which could potentially result in a reference to the CMA, or in the FCA itself taking regulatory action under its Financial Services and Markets Act 2000 (FSMA) powers. The FCA has made considerable use of these powers and has conducted several market studies and "thematic reviews" (although it has not, to date, exercised the power to refer a market to the CMA).

2. The FCA's new concurrent competition powers

On 1 April 2015, the FCA obtained new concurrent competition powers, including the power to enforce the prohibitions on anti-competitive behaviour in the CA98 and the EU Treaty in relation to the provision of financial services in the UK.

It also now has powers under the EA02 to carry out market studies and to make market investigation references to the CMA for a detailed review of a particular market in relation to the provision of financial services. These powers apply to all firms in the financial services sector (including banking, credit, insurance, personal pensions and investments) and not just those falling within the FCA's regulatory perimeter.

Under so-called 'primacy' obligations to which concurrent regulators are subject, the FCA also now has a duty to consider whether it would be more appropriate to use its CA98 powers before using its regulatory powers in respect of a particular form of market failure.

3. How will the FCA exercise its concurrent powers?

In January 2015 the FCA published a consultation document seeking views on how it proposes to apply its new concurrent powers. The FCA has not yet put finalised guidance in place, but intends to do so "as soon as possible" after 1 April 2015.

  • Investigatory powers: The FCA has made clear that its concurrent competition powers are in addition to its ability to use its financial regulatory powers under FSMA, in pursuit of the FCA's competition objective.  Therefore, where anti-competitive conduct breaches obligations under FSMA (and other legislation) as well as competition law, the FCA can use its other powers and its concurrent competition powers in parallel or sequentially in respect of the same conduct. This may result in businesses receiving separate information requests under different information gathering powers, and information obtained by the FCA in other ways can be used in an investigation under the CA98. However, once the FCA has decided to launch an investigation under the CA98, it proposes to use only its CA98 powers to conduct that investigation.
  • Leniency: The FCA expects that leniency applications will be made directly to the CMA, as the FCA does not have concurrent powers in relation to the criminal cartel offence under the EA02. However, the FCA proposes applying the CMA's leniency policy for cases of a civil nature under the CA98 which are transferred to it under concurrency arrangements. Furthermore, if a firm were to apply to the FCA for leniency, it has said that it would grant immunity or a reduction in a fine if the CMA's leniency criteria were satisfied.
  • Settlement: The FCA does intend to apply a settlement process. Settlement discounts will be capped at 20% where settlement takes place before a Statement of Objections is issued and 10% thereafter. The FCA may also require a settling party to confirm that it will not appeal a subsequent infringement decision to the Competition Appeal Tribunal. This position is at odds with the CMA's and the European Commission's approach to settlement, where settling parties are not required to agree not to appeal.
  • Disclosure of competition law infringements: The FCA is proposing to amend its Supervision Manual to extend to competition law infringements the existing obligation for firms (under Principle 11 of the FCA's Principles for Businesses) to notify the FCA of "anything relating to the firm of which that regulator would reasonably expect notice".  The FCA proposes that firms must notify it "as soon as it becomes aware, or has information which reasonably suggests, that an infringement has, or may have, occurred". This appears to be a very broad requirement, and is not subject to any materiality or geographic limitation. This is a compulsory obligation and is distinct from any voluntary application made by the firm under the CMA's leniency policy. There is considerable uncertainty as to how this requirement will interact with the CMA's leniency policy.
  • Market studies: The FCA now has the choice of conducting market studies under either its FSMA powers or its powers under the EA02. The remedies available under each are broadly similar although some different procedural requirements apply. The FCA's FSMA powers only enable it to require information from regulated firms, whereas its powers under the EA02 are broader. Conversely, the EA02 powers require adherence to strict timetables and this may influence the FCA's choice of approach. The FCA also now has the power to refer a market to the CMA for a detailed market investigation. A factor in deciding whether to make a market investigation reference will be whether remedies are expected to affect firms that the FCA does not regulate.

4. The PSR's concurrent competition powers

The PSR has had market investigation reference powers under the EA02 since 1 April 2014, but has not yet exercised these. On 1 April 2015, it also obtained concurrent competition powers under the CA98 in relation to participation in certain retail payment systems which have been "designated" by HM Treasury. Following a consultation, HM Treasury designated Visa, MasterCard, Bacs, CHAPS, Faster Payments, LINK, Cheque & Credit and Northern Ireland Clearing as falling within the scope of PSR regulation because they are of sufficient importance that deficiencies in the design of the system, or disruption of its operation, would likely have serious consequences for service users.

HM Treasury will assess on an annual basis whether any payment systems not currently included (such as American Express and PayPal) should be designated, or whether any currently designated systems should be de-designated.


There has been a perception in the past that some UK sectoral regulators have been reluctant to use their concurrent competition powers. However, all the indications are that this will not be the case for the FCA going forward.

To date, the FCA has been very active in using its existing competition powers. It has undertaken a series of market studies in a variety of areas (insurance add-ons, cash savings, retirement income products, credit cards) as well as considering competition issues through "thematic reviews" in relation to a number of products or markets (such as the annuities market). It also collaborated and worked closely with the CMA on the joint SME banking market study.

The FCA's Business Plan for 2015/2016 shows that it will continue in this vein. The FCA already announced in February 2015 a market study in investment and corporate banking which will be formally launched in Spring 2015 and, over the coming year, there will be further market studies in areas such as asset management and non-advised sales of investment and protection products. While the FCA intends to focus on fewer market studies and reviews than in 2013 and 2014, it expects to subject those markets to a deeper review. It remains to be seen whether the FCA will conduct these market studies under its existing financial regulatory powers or under its EA02 powers.

As regards its CA98 investigatory powers, the FCA considers that it is well placed to identify competition law infringements, including as a result of the obligation on firms to disclose potential infringements of competition law under Principle 11. It considers that it is well placed to deal with such infringements once uncovered, through its FSMA tools and through use of its new concurrent competition law powers.

The FCA has also recruited a significant number of competition law professionals in anticipation of concurrency and sought to build up relevant experience in the run-up to concurrency.

Therefore, all the signs are that the FCA plans to use its concurrent competition powers actively.