The Competition and Markets Authority (CMA) has announced a new committee – the Joint Regulatory Oversight Committee (JROC) – to oversee the continued rollout of Open Banking in the UK, among other recommendations.
Chaired by the Financial Conduct Authority (FCA) and the Payments Systems Regulator (PSR) - with the Competition and Markets Authority (CMA) and Treasury attending as members - the JROC will be tasked with overseeing the regulatory framework of Open Banking technology.
The JROC will, in theory, serve to support a robust evolution for Open Banking and its associated technologies - ensuring the UK remains a global leader in the area.
The JROC will also be responsible for making recommendations for the design of the permanent future regulatory framework for Open Banking, considering any necessary interim governance and funding arrangements. The PSR’s statement reads that a “more broad-based funding model is necessary, reflecting the activities of the future entity” and that a long-term funding model should be a top priority for the future entity’s board. Funding has been seen as a significant point of contention through the consultation period.
HM Treasury, the CMA, the FCA and the PSR agree that the entity succeeding the Open Banking Implementation Entity (OBIE) should:
- Have effective regulatory oversight, with a new committee - led jointly by the FCA and PSR - to consider the entity’s vision, governance and priorities;
- Be independent, well-governed and underpinned by a set of values and cultures that include an emphasis on integrity and promoting ethical behaviours;
- Play a central role in delivering new proposals beyond those required by existing regulations;
- Be adequately resourced to carry out its functions through a more broadly-based and sustainable funding model; and
- Effectively serve the interests of consumers and businesses, including consideration for how these groups will be represented on the board.
Andrea Coscelli, Chief Executive of the CMA, states: “Open Banking has been a major success in the UK, bringing innovative new services to retail banking and benefiting consumers, businesses and the UK economy. The CMA has carefully considered the appropriate future arrangements to boost open Banking so that its significant benefits can be realised even more widely.”
Commenting on the announcements, the OBIE’s trustee and chair, Charlotte Crosswell, says: “We welcome the announcements by the government and regulators, and the endorsement it gives for the future of Open Banking to our thriving ecosystem. There has been significant collaboration in developing the infrastructure, standards and ecosystem that we have in place today. We now need to drive forward competition and adoption and realise the benefits of innovation for consumers and businesses across the UK.”
Some firms, however, have aired concerns around the course of the Open Banking rollout. Indeed, there remains some uncertainty among fintechs as to how ‘open finance’ will be achieved, in practice.
Bee Thakur, UK public policy lead, TrueLayer, comments: “For the UK to maintain its position as a centre of fintech innovation, the focus needs to be on the further development of the open finance ecosystem. We need the future entity that replaces OBIE to be well funded and empowered to hold all market participants to account to achieve this. That requires robust oversight with governance that is independent from banks and other institutions where access to data and payments is being sought.”
Maria Palmieri, head of public policy, Yapily, adds: “Whilst it is encouraging to see further clarity from the CMA on the rollout of a JROC, many questions remain around the future of Open Banking in the UK. With the current mesh of regulators, it is almost impossible for fintechs, banks and Open Banking providers to plan for the future. We need to see the creation of a formal pen finance framework and further guidance on the future role of OBIE.”
Charlie Mercer, head of economic policy, Coalition for a Digital Economy (Coadec), feels today’s announcement, “brings us no closer to open finance. For months, the industry has looked to this moment as setting the path to the opening up of new datasets, but the elephant in the room is the lack of any concrete mandate to do so.”
Emma Burrows, head of the fintech development office at Stripe, notes: “The UK has unfinished business with Open Banking. The decision to move early and boldly on Open Banking rules should be commended, and we now need continued regulatory focus and a business model that works for all players to unlock its full potential. The businesses that run on Stripe are increasingly calling for Open Banking-enabled financial services which make it easier to sell online. We look forward to seeing how this new committee will make these possible.”