UK financial regulators have outlined open banking proposals.
The Joint Regulatory Oversight Committee (JROC), co-chaired by the FCA and the Payment Systems Regulator (PSR), say the measures will bring “opportunities for new products and services, allowing consumers and businesses to share data and make payments in more convenient and efficient ways”.
The JROC also outlines its vision for a new institution to replace the Open Banking Implementation institution to guide the roadmap and the principles that would support a long-term regulatory framework, which the Government intends to legislate.
The report summarises JROC’s new entity goals:
“The future entity will adhere to high standards of corporate governance, have a wide membership base underpinned by broad-based, proportionate funding and liability arrangements, and represent end users (consumers and businesses) in its decision making.
To ensure it can do this effectively, we will work with open banking participants over the next few months to undertake further analysis of the optimal structure, governance and funding of the future entity and the OBIE’s transition to it.”
Q4 2023 brings a detailed plan.
Five topics and two-year priorities form the future framework. These include improving availability and performance, minimising financial crime, consumer protection, information flows to third party providers and end users, and promoting additional services utilising non-sweeping variable recurring payments (VRP) as a prototype.
Expanding open banking use cases need the latter. Token CEO Todd Clyde:
“We are particularly pleased to see regulators recognise the potential of non-sweeping Variable Recurring Payments (VRPs) in their roadmap for open banking. VRPs are key to unlocking richer open banking use cases, such as one-click e-commerce payments and subscription payments.”
The JROC claims the Open Banking Implementation Entity will immediately boost fraud data collecting and API access to deflect concerns over delays in completing the transfer to the future supervision entity.
The committee’s co-chairs, Chris Hemsley of PSR and Sheldon Mills of FCA, say:
“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.”
