UK Finance proposes new body to oversee Open Banking

Source: IBS Intelligence 2020-06-22

UK Finance, which represents more than 250 firms across the UK banking industry, has called for the establishment of new body to oversee Open Banking, with firms paying ‘fair and equitably’ for their use of central services. In addition, a separate monitoring function would be established to review ongoing compliance with the Competition and Markets Authority’s (CMA) Order.

The future model for how the UK’s Open Banking (OB) functions can progress once the current implementation phase ends early next year is set out in the report, Open Banking – Future State, by UK Finance in association with Accenture.

Eric Leenders, UK Finance Managing Director, Personal Finance, said: “Open Banking is a significant technological and regulatory initiative which has huge potential for the future. It is vital that the Open Banking service community works together to ensure that the transition from the current roadmap to a more permanent plan is smooth, enabling the UK to maintain its world leading position in Open Banking as it develops.”

The CMA’s final Open Banking implementation roadmap is due to end in early 2021, with the banking and finance industry then required to keep the function running. The new report sets out how this transition could be achieved and proposes that at the end of the current roadmap, the Open Banking functions are maintained and moved into a service company that is governed and funded by the wider banking and finance industry in a fair and equitable way. The goal of the next phase is to maintain what has been achieved and extend further in the future.

To ensure a fair and representative governance structure across the industry, the report recommends that the service company Board should consist of a mix of independent and industry experts with customer experience. It also suggests that the monitoring of the original CMA Order on the CMA9 remains separate from the service company, to enable the service company to adapt to future mandates subject to the promotion of competition.

The UK banking and finance industry has invested an estimated £1.5 billion in infrastructure since the launch of Open Banking in 2016 by nine of the largest banks (the CMA9: AIB Group (UK), Bank of Ireland (UK) , Barclays Bank, HSBC Group, Lloyds Banking Group, Nationwide Building Society, Northern Bank, The Royal Bank of Scotland Group, Santander UK) and Payments UK, which is now part of UK Finance.

Tom Graham, managing director in Accenture’s UK banking practice, said: “As the power of Open Banking continues to gain momentum and drive welcome innovation in the UK for the benefit of consumers, community collaboration is vital to ensuring this continues. This report lays out the next steps for building on the highly successful foundations the UK has built – maintaining the country’s technical lead, supporting business models built on this infrastructure, whilst considering what might come next.”

The new proposals follow on from the industry body’s proposals to the UK government’s investigation into regulatory coordination. The response called for UK regulators to better implement their existing duties and powers and apply practices from elsewhere in the regulatory landscape. It also recommended that the UK government should set out a clear strategy and policy statement for the banking and finance sector.

UK Finance proposes new body to oversee Open Banking

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