Anti-competitive Information Exchange in the Financial Services sector: still under scrutiny by the FCA

On 30 November 2023, the Financial Conduct Authority (FCA) imposed fines of over £150,000 combined on three money transfer firms for price fixing in Glasgow. The firms received settlement discounts for admitting to the FCA that they had broken competition law. Separately, the FCA also wrote to other money transfer firms in Glasgow to remind them of their obligations under competition law.

• Anti-competitive Conduct (during a 3-month period in 2017):
  (i) Coordinating on certain exchange rates offered to customers in Glasgow for converting UK pounds into Pakistan Rupees, when transferring money to Pakistan;
  (ii) Fixing the transaction fee charged when making certain money transfers from the UK to Pakistan via one of the firm’s services;
  (iii) Although one firm did not operate a branch serving customers in Glasgow, the FCA found it had facilitated the conduct of the other two firms which did make the transfers from branches in Glasgow.
  
  
• Concern: The FCA prioritised this investigation because “money transfer businesses are an important service relied upon by many communities”, and “[price fixing]” can lead to customers being ripped off, and it erodes public trust.”

A non-confidential version of the decision will be published in due course.

• Increased competition law focus on financial services: this follows other similar competition law investigations into the financial services industry:
  
  
• In May 2023, the Competition and Markets Authority (CMA) provisionally found that 5 major banks unlawfully shared competitive sensitive information (concerning the buying and selling of UK government bonds) through online chatrooms. There is no indication yet as to when the CMA’s final decision will be released.
  
  
• In 2019, the FCA fined three asset management firms over £400,000 for sharing strategic information (e.g. confidential bidding intentions, form of the price, volume they wished to acquire) before setting share prices.

Sharing commercially sensitive information remains a significant issue in the financial services sector, because there are instances where information arguably needs to be shared, so being able to determine what exchanges may be anti-competitive is key. The CMA provided some clarification on what constitutes anti-competitive information exchange in its recently published Horizontal Agreements Guidance from August 2023 – Section 8. Arguably, the CMA has not gone far enough, so businesses need to carefully assess their practices and determine if their conduct may infringe the competition rules. Not least, the role of ‘facilitation’ remains an import factor for businesses to beware of and the competition authorities are continuously clamping down on businesses that help facilitate collusion.

If you have any questions about these types of competition law issues, please get in touch with Saskia King.