Legal development

Thought for the Week: Collaborate or compete: FCA fines Glasgow FX cartel

Thought for the Week: Collaborate or compete: FCA fines Glasgow FX cartel

    The FCA fined three money transfer firms a combined total of over £150,000 for entering into anti-competitive arrangements. In this week's Thought for the Week, we examine this second use of the FCA's competition enforcement powers in the context of its new secondary objective to achieve international competitiveness and growth.


    The FCA found that the Glasgow branches of Dollar East (International Travel & Money Transfer) Ltd and Small World (LCC Trans-Sending Limited) coordinated certain GBP-Pakistani Rupees FX rates and fixed transaction fees charged to customers transferring money from the UK to Pakistan. 

    A third company, Hafiz Bros Travel & Money Transfer Limited, which did not operate in Glasgow, was found to have been a facilitator of the anti-competitive conduct. 

    Each of the companies entered into a settlement agreement with the FCA and admitted that they infringed the Chapter 1 prohibition in the Competition Act 1998.  Each received a settlement discount on their respective fines to reflect the fact that a settlement was reached. 

    The FCA's use of its competition enforcement powers 

    Surprisingly, this is only the second infringement decision issued by the FCA since it gained its concurrent competition law powers nearly 10 years ago, the first decision being issued to firms in the asset management sector in February 2019. The FCA decided to discontinue two investigations into suspected anti-competitive arrangements in December 2020 and March 2022 on administrative priority grounds. Moreover, notwithstanding the FCA's expertise in regulating financial markets, the Competition and Markets Authority, and not the FCA, is undertaking the investigation into five major banks suspected of anti-competitive arrangements in relation to UK government bonds.   

    However, there are signs that the FCA is increasing its use of competition powers. In the last 13 months the regulator has announced three competition investigations, and it has also used its competition powers to undertake a market study in respect of the supply of benchmarks, credit ratings and market data vendor services to consider the competitive dynamics in wholesale data markets. This increased activity also comes at a time when the CMA is assessing the efficacy of sector regulators (including the FCA) having concurrent powers to regulate competition law.

    FCA mandate to grow firms' competitiveness

    In addition to the FCA's operational objective to promote effective competition, in July, the Financial Services and Markets Act 2023 gave the regulator a secondary objective: to facilitate the international competitiveness and growth of the UK economy. 

    In its statement on its secondary objective, the regulator emphasised the importance of effective competition to achieve growth and competitiveness; on the basis that it lowers prices for consumers and market participants, increases the quality of goods and services, and drives innovation and efficiency.

    In a recent speech focusing on the new secondary objective, the FCA's CEO, Nikhil Rathi, focused on the need to "collaborate to compete" – calling on industry, government and regulators to work together to fulfil a "long-term vision" to boost UK competitiveness and growth. 

    The recent uptick in its use of competition powers suggests that part of the regulator's "long-term vision" may also include clamping down more proactively on the wrong kinds of collaboration (i.e. collaborating rather than competing in the market) which stifles competition and has a negative effect on growth. Although the investigation into the money transfer firms began in 2018 (well before the new secondary objective came into being), the FCA implied in its press release that this investigation had strategic importance for the regulator, stating that: "the FCA is determined to use its powers to ensure that local retail markets are competitive across the UK and therefore prioritised this investigation."

    What's next?

    Given the FCA's existing pipeline of competition cases, and given the stated importance of effective competition in the context of the secondary objective of UK competitiveness more broadly, we may expect to see the FCA continuing to look for opportunities to use its competition powers in 2024.

    Authors: Eleanor RobinsonHayden Dunnett and Rob Anderegg

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


    Stay ahead with our business insights, updates and podcasts

    Sign-up to select your areas of interest