Joint Committee Sets Direction For Next Phase Of UK Open Banking
Summary of Development
Today [17/04/2023], the Joint Regulatory Oversight Committee (JROC), co-chaired by the FCA and the Payment Systems Regulator (PSR), has published its recommendations for the next phase of open banking in the UK.
The JROC is playing a leading role in taking the next steps to realise the full potential of open banking, which currently has over 7 million active users in the UK. This will bring opportunities for new products and services, allowing consumers and businesses to share data and make payments in more convenient and efficient ways.
Taking the steps, set out below, will enable open banking to develop further in a safe, scalable and economically sustainable way. The JROC’s recommendations contain a roadmap of priorities over the next two years, covering five key themes:
- levelling up availability and performance
- mitigating the risks of financial crime
- ensuring effective consumer protection if something goes wrong
- improving information flows to third party providers (TPPs) and end users
- promoting additional services, using non-sweeping variable recurring payments (VRP) as a pilot
The JROC also sets out its vision for the open banking future entity, including the next steps which need to be taken in designing it. There will be a transition from the Open Banking Implementation Entity (OBIE) to the future entity which will build on the significant progress made to date. In addition, the report outlines the principles that will underpin a long-term regulatory framework, which the Government is intending to legislate for.
The co-chairs of the committee, PSR’s Managing Director, Chris Hemsley, and FCA’s Executive Director, Consumers and Competition, Sheldon Mills said: 'Open banking can be a UK success story and we want to help it grow and develop sustainably. Today's report sets out a roadmap and the framework for delivering the next phase of open banking.Only through effective collaboration can we deliver on our ambition and develop open banking in a way that promotes continued innovation and competition, for the benefit of consumers, businesses, and the wider economy.'
The JROC will continue to work with industry participants, consumer and business representatives, and other stakeholders to deliver the plans under the five themes, in addition to the design of the future entity as set out in the recommendations.
The JROC will monitor progress against all activities in the roadmap and will publish a progress report in Q4 2023. Also in Q4 2023, the JROC will set out a detailed plan for the future entity and the OBIE’s transition to it.
A full timetable of the next steps is set out in today’s publication.