The UK competition regulator has recommended the creation of a new entity to exercise “regulatory oversight” of the open banking sector.
The Competition and Markets Authority (CMA) said on Friday that the yet to be named regulator will replace the Open Banking Implementation Entity (OBIE).
In a joint statement with HM Treasury, the Financial Conduct Authority and the payment systems regulator, the CMA outlined the establishment of a Joint Regulatory Oversight Committee (JROC).
The CMA’s recommendation is that the future entity be jointly led by FCA and PSR, and have independent and accountable leadership. The majority of the board should be made up 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 Andrea Coscelli, Chief Executive of CMA.
“The CMA has carefully considered appropriate future arrangements to boost open banking so that its significant benefits can be realized even more widely. We have set out today the fundamental principles that will allow the new entity to take the reins successfully. »
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 that it had enabled greater competition in the banking sector and helped underpin Britain’s fintech boom.
The latest announcement comes after a group of UK fintechs criticized the CMA over uncertainty over the future of open banking.
“We can’t afford to lose our focus now,” said Nanna Saito Nielsen, vice president of banking operations at GoCardless. UKTN in response to the statement.
“While we have laid the foundations for open banking, there are still fundamental issues to address to enable mass adoption, such as improving API availability and creating a payment that is, at a minimum, good and consistent across banks.”
Saito also said there remains a funding issue that has yet to be properly resolved: “While we are encouraged to see a broader funding model, we haven’t seen the specifics yet.”
Emma Burrow, head of the fintech development office at Stripe, said UKTN“The UK has unfinished business with Open Banking. The decision to act early and boldly on open banking rules is to be welcomed, and we now need continued regulatory attention 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 mark.
“Coordination between the CMA and the OBIE is key to the evolution and further standardization of open banking in the UK,” said Damien Cahill, co-founder and COO of fintech Vyne. “It will empower users, give them more control over their data, and provide a rich marketplace of competition and innovation to better meet their banking and payment needs.”