Banks to avoid further action over City fees

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The Independent Online

London's investment banks will avoid an investigation by the Competition Commission into the fees they charge for underwriting share issues – despite the Office of Fair Trading saying they are still charging far too much.

The watchdog said that since the financial crisis, fees charged have risen sharply. Between 2000 and 2007 they were typically between 2 and 2.5 per cent. Since then they have surged above 3 per cent. But the OFT said it was up to companies and their investors to solve the problem by seeking better deals.

"The OFT considers that concerns around the level of fees can be tackled most effectively and efficiently by companies and institutional shareholders rather than by further intervention by the competition authorities," it said.

The watchdog also urged fund managers to take more responsibility for improving the situation by urging companies not to overspend on fees to the detriment of shareholder value. They could also lower fees by taking some of the risk on their books themselves, it added.