What we’re doing to promote effective competition in the interests of consumers.
When competition works well, consumers are empowered and informed. They can make sense of the information they receive and can take their business elsewhere if they’re not happy
Firms strive to win custom based on service, quality, price and innovation, which in turn, helps deliver even better outcomes for consumers.
However, there are many ways in which competition can be weakened. Firms may exploit the difficulties consumers face in making choices about often complex services. They may also collude to fix and therefore raise the prices they offer consumers.
Healthy competition relies on appropriate levels of consumer protection and integrity in the financial system. In a healthy system
Consumers know they can trust the firms they buy from and are protected if something goes wrong markets are open to entry and innovation, and successful, innovative firms thrive, while unsuccessful firms change or exit Read about our approach to competition
Our role
We have an objective to promote effective competition in the interests of consumers. We work towards that objective, as far as the work is compatible with advancing our other objectives.
This means that competition is central to our thinking across all our work.
We can also enforce against breaches of competition law for the provision of financial services generally, alongside the Competition and Markets Authority. In April 2019, this was expanded to include claims management services provided in Great Britain.
All businesses must comply with competition law. There can be serious consequences for non-compliance, including fines.
How we promote competition
We investigate markets, identify concerns and take steps to address issues that could distort effective competition. Find out more about our market studies.
Markets can deliver much better outcomes if consumers can access information about the products and services they receive, assess it, and then act. For example, in our retirement income market study, we found that a large number of consumers found the information they received was generally difficult to navigate. We addressed this through better information in the ‘wake up’ packs typically sent to people six months before they retire.
When looking at retail insurance services, we found that disclosing the premium consumers had paid the previous year was the most effective way of prompting consumers to shop around, cancel or negotiate their insurance policy. Doing so caused the equivalent of 11 to 18% more consumers to switch or negotiate their home insurance policy.
When we looked at pricing practices in the general insurance market we found evidence of firms gradually increasing the price of different types of insurance upon renewal.
This ‘price-walking’ was a result of complex and opaque pricing techniques used by firms. It meant loyal customers were paying significantly higher prices and were sometimes being discouraged from shopping around.
We banned differential pricing between new and existing customers and introduced remedies to make it easier for customers to get out of policies that renew automatically.
We also intervene in wholesale markets where we identify competition issues.
Having gathered evidence in a market study into investment and corporate banking, we found that the process for providing information to market participants during an initial public offering (IPO) process needed to be improved.
We created rules that aim to make sure that relevant parties have access to information at an appropriate time during the process, through requiring a prospectus to be published.
In 2014, we launched the Innovation Hub to help innovative firms launch products and services that would benefit consumers through lower prices, faster service, or more choice.
Now, Innovation Pathways helps firms understand our regulation and navigate our regulatory regime, while our Regulatory Sandbox allows firms to test innovative propositions in the market with real consumers.
In 2016, we also launched the New Bank Start-up Unit to support competition by helping prospective banks enter the market. And in 2021 to 2022, we authorised or registered 55 providers of open banking services to increase innovation and competition in banking and payment services.
Contact us
Please tell us if you feel that your efforts to compete are being unfairly held back, or if competition in your sector isn’t working well for consumers.
We’re interested to hear about anything that could be holding back healthy competition. For example:
- Common industry practices preventing others doing things differently
- Specific behaviour of one or more of your competitors that may be preventing other firms accessing consumers or markets
- Regulations that you consider overly burdensome
We also welcome information from industry participants, representative groups and the public about markets that don’t appear to be working well.