City oversight will not take action against banks accused of unfair fundraising efforts to save from a pandemic, despite receiving “credible reports” of misconduct.

Sky News may report that the FCA (Financial Conduct Authority) has completed an investigation that lasted nearly two years, about the so-called linking of credit agreements by banks to the explicit requirements that listed companies use to provide other services.

On Wednesday, city sources expressed surprise that the regulator decided that no further action was required, despite strong evidence from companies and competing investment banks that the practice was widespread at the start of the pandemic.

A number of major lending banks have been accused of agreeing to provide credit services to listed clients only if they have been included in mandates that will help them increase equity.

When COVID-19 hit in the spring of 2020, many of the listed companies – including Compass Group, Foxtons, Informa, Restaurant Group and WH Smith – tried to bolster their balance sheets by raising borrowing limits and selling new shares to investors.

Billions of pounds have been raised through emergency money calls to prevent a flood of insolvency and tens of thousands of additional job losses.

In a statement, an FCA spokesman said: “We have completed the work that has been outlined in [Dear CEO] letter, including subsequent contacts with individual firms.

“If we get any evidence of existing problems, we will take action without hesitation.”

The letter, mentioned in the guard’s statement, was issued in late April 2020 by the heads of major banks.

It says the FCA “has heard credible reports of a small number of banks failing to deal with their corporate clients in negotiating new or existing debt loans because clients are targeting the current exceptional circumstances.”

“In particular, we have heard reports that banks may have used their lending relationships to put pressure on corporate clients to secure roles in equity mandates that the issuer would not otherwise have assigned them to.

“In some cases, these roles may be“ name-only, ”and additional services are provided by few or not at all in exchange for a share of the fee.

“We are concerned that linking customers using additional services or demanding payment for non-services is not in the best interests of those customers, distorts competition, undermines market confidence and calls into question the integrity of companies and individuals.”

The FCA warned that such behavior “is likely to increase overall transaction costs for corporations trying to raise money.”

Sky News revealed at the time that Numis, an independent broker, was one of those who warned the FCA of allegations of wrongdoing.

Barclays, BNP Paribas and Santander were among the investment banks involved in a number of stock-raising deals where board directors and rival bankers expressed distrust.

Linking services – when banks make the provision of one product, such as a credit line, conditional on the acceptance of others through the signing of restrictive provisions – was banned by the FCA in 2017.

The FCA declined to say when exactly its work on the issue was completed, but denied the allegation that it had “stopped” its investigation.

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