The UK’s competition regulator has recommended the establishment of a new entity to have “regulatory oversight” of the open banking industry.
The Competition and Markets Authority (CMA) said on Friday that the yet to be named regulatory body will replace the Open Banking Implementation Entity (OBIE).
In a joint statement with HM Treasury, the Financial Conduct Authority and Payment Systems Regulator, the CMA outlined the establishment of a Joint Regulatory Oversight Committee (JROC).
The CMA’s recommendation is that the future entity is led jointly by the FCA and PSR, and have independent and accountable leadership. The majority of the board should be comprised of independent directors, the statement added.
“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,” said CMA chief executive Andrea Coscelli.
“The CMA has carefully considered the appropriate future arrangements to boost open banking so that its significant benefits can be realised even more widely. We have today outlined the core principles that will ensure the new entity successfully picks up the reins.”
Open banking was launched in the UK in 2018 and improves interoperability between banking services by opening up data to third-party developers through the use of APIs.
The CMA, in its report recommending the implementation of open banking, found it has allowed for greater competition in banking and helped support the British fintech boom.
The latest announcement comes after a group of UK fintechs criticised the CMA over the uncertainty of the future of open banking.
“We can’t afford to lose focus now,” Nanna Saito Nielsen, VP of banking operations at GoCardless, told UKTN in response to the statement.
“While it’s true that we’ve built the foundations of open banking, there are still fundamental issues which must be addressed to enable mass adoption, such as improving API uptime and creating a payer experience that is, at a minimum, good and consistent across banks.”
Saito also said that there was still an issue of funding that has yet to be properly addressed: “While we are encouraged to see a broader funding model, we have yet to see the details.”
Emma Burrow, head of the fintech development office at Stripe, told UKTN: “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.”
In January, the number of UK open banking users passed the five million milestone.
“Co-ordination between the CMA and the OBIE is critical for the evolution and further standardisation of open banking within the UK,” said Damien Cahill, co-founder and COO of fintech company Vyne. “It will empower users, giving them more control over their data and providing a market rich with competition and innovation to better meet their banking and payments needs.”