Promoting competition

Find out how we promote effective competition in the interests of consumers.

Promoting competition that is effective

When competition works well, consumers are empowered as well as informed. They can make sense of the information they are given and can take their business elsewhere if they are not happy. In turn, firms strive to win custom on the basis of service, quality, price and innovation. This helps generate better outcomes for consumers. Markets are open to entry and innovation, and successful, innovative firms thrive, while unsuccessful firms change or exit.

There are many ways in which competition can be weakened. For example, firms may exploit the difficulties that consumers have making the right choices about often complex services.

Healthy competition therefore relies on appropriate levels of consumer protection and integrity within the financial system. Consumers need to know they can trust the firms they buy from and are protected if something goes wrong. This gives them the confidence to exercise choice and in turn drives firms to compete hard to win their custom.

When the FCA was created in 2013, we were given an objective to promote effective competition in consumers’ interests in regulated financial services. We also have a competition duty. Together, this mandate empowers us to identify and address competition problems and requires us to adopt a more pro-competition approach to regulation. It also recognises the potential of competition to advance all of our operational objectives.

In April 2015, we were given powers to enforce against breaches of competition law, alongside the Competition and Markets Authority, for the provision of financial services generally.

Competition – a catalyst for change

Mary Starks, the FCA’s Director of Competition, explains how competition can help markets work better for consumers. She discusses how competition can drive better quality, value and choice, as well as encourage innovation.

Promoting competition – what we do

We investigate a range of markets, identifying concerns and taking steps to address features which could inhibit effective competition. Find out more about our Market Studies and our published guidance on our powers in relation to market studies: FG15/9 – Market studies and market investigation references.

Helping consumers get the information they need

For example, in our Retirement Income market study we found that a substantial proportion of consumers found the information they receive from providers generally difficult to navigate. We are seeking to address this through better information in the 'wakeup packs' typically sent to people six months before they are due to retire.

Empowering consumers to assess the best choice for them

We are working with firms to improve how they communicate with consumers. This focuses on how information is presented to consumers, which could empower people to make effective decisions about the products or services they hold or are looking to buy.

Helping consumers to act on their decisions

When looking at retail insurance services, we found that disclosing the premium that consumers had paid the previous year was the most effective way to prompt consumers to shop around, cancel or negotiate their insurance policy. Doing so caused the equivalent of 11-18% more consumers to switch or negotiate their home insurance policy.

Seeking to ensure that firms compete fairly

We have powers to address potential breaches of competition law.

Making it easier for new competitors to launch

We have improved our authorisations processes for retail banks and launched the New Bank Start-up Unit to stimulate competition by helping new, prospective banks to enter the market.

Encouraging innovation in financial services

We launched the Innovation Hub to help firms that are innovating in consumers’ interests to navigate their journey to becoming authorised.

We have helped over 200 innovative firms, with 20 of those now authorised. Our regulatory sandbox helps create a ‘safe space’ for businesses to innovate.

Firms – what this means for you

You need to comply with competition law

All businesses must comply with competition law and there can be serious consequences for non-compliance, including fines.

If you think we should look at an issue you’ve come across

If you feel that your efforts to compete are being unfairly hampered, or that competition in your sector is not working well for consumers, please tell us about it.

We would be interested to hear about anything that could be inhibiting healthy competition. For example, this could be as a result of common practices in the industry that prevent others doing things differently, specific behaviour of one or more competitors that could be preventing other firms from accessing consumers or markets and/or regulation that you consider is unduly burdensome.

Contact us

We welcome information from industry participants, representative groups and the public about markets that appear not to be working well. You can tell us about these concerns or complaints by contacting our Customer Contact Centre, by email: CompetitionMailbox@fca.org.uk or in writing: Competition Division, 25 The North Colonnade, London E14 5HS.