Open Banking was introduced following the CMA’s Retail Banking Market Investigation, which set out a blueprint for improving the way banks could serve customers and small business. As a result, in 2017 the CMA ordered the 9 largest banks in Great Britain and Northern Ireland (the CMA9) to set up an Open Banking Implementation Entity (OBIE) which would enable customers to share their transaction history data safely and securely with trusted third parties. Today, the UK is a global leader in this area and it is estimated that half the UK’s small businesses and over 5 and a half million consumers now use services powered by Open Banking technology.

In 2020, the CMA received allegations relating to conduct at the OBIE and Alison White was appointed to undertake an independent investigation. Her findings were published in October 2021. The investigation concluded that the then Trustee of the OBIE had not ensured that the organisation was properly managed in accordance with the Retail Banking Market Investigation Order 2017 (the Order). It also found that a lack of appropriate corporate governance had contributed directly to those organisational failings.

Following that investigation a new OBIE Trustee, Charlotte Crosswell, was appointed. Subsequently, the OBIE has strengthened its governance through the appointment of independent non-executive directors and enhancements to its controls, policies and approach risk management. In addition, the OBIE appointed a Chief Executive to strengthen the management and leadership of the OBIE, and a Director of People and HR to drive forward improvements to HR practices and workplace culture. The OBIE also launched a redress process to consider workplace-related complaints by former staff.

When the Alison White report was published, the CMA also announced that Kirstin Baker, a CMA Non-executive Director, would lead a review into the specific lessons for the CMA in its approach to designing, implementing and monitoring remedies in future market investigations. The Terms of Reference of this review were published in November 2021 and it is the findings of this review that are being published today.

Ms Baker’s review has found that the technical solutions to achieve the Open Banking remedy have and continue to be successfully implemented. However, the CMA did not fully anticipate the scale and complexity of its remedy and it failed to foresee or manage some of the key risks inherent in the delivery of the project, in particular in relation to governance at the OBIE and relationships with key stakeholders.

The review makes 7 recommendations to the CMA:

Recommendation 1: Build more effective Board oversight and risk management of the end-to-end strategy for complex remedies

Recommendation 2: Set out processes and governance for CMA Board and Executive oversight of the delivery and implementation of remedies

Recommendation 3: Consider questions relating to implementation at the remedies design phase

Recommendation 4: Ensure key factors are considered where a remedy establishes a new entity or large and enduring CMA function

Recommendation 5: Include gateways in the remedy delivery and implementation process

Recommendation 6: Implement effective and agile internal governance and stakeholder engagement in remedy delivery and implementation

Recommendation 7: Conduct an evaluation case study of complex market investigation remedies

Kirstin Baker, who led the Lessons Learned review, said:

The Open Banking remedies are some of the most complex ever implemented by the CMA and have been important in opening up competition in retail banking and supporting the growth of UK fintech.

Many stakeholders I spoke to for this review underlined that the CMA should continue to be bold and innovative in using its market powers to benefit consumers. However, the Board recognised that there were lessons for the CMA to learn from the governance failings at the OBIE identified by Alison White and my review has found that the CMA did not match the ambition of the remedy with an appropriate level of oversight or strategic risk management.

The CMA seeks to be a learning organisation and I am pleased that staff at all levels engaged constructively with this review and that changes have already been made or are in progress to address the issues identified.

David Stewart, CMA Executive Director of Markets and Mergers, said:

Since joining the CMA earlier this year, I have become even more convinced of the potential of market investigations to deliver significant positive impacts for consumers.

But however good our analysis and proposed remedies, we will only achieve better outcomes for consumers, businesses and the economy if we follow through on our decisions with effective implementation, monitoring and enforcement.

That is why I am so grateful to Kirstin Baker for her review. It will help shape our work programme on remedies and I am determined that we will deliver on it and report on it publicly.

The CMA will publish a further update next year on its progress in implementing this work programme on remedies.