Announcement of next steps for future oversight of Open Banking

The Competition and Markets Authority (CMA) today published its recommendations for the future oversight and governance of Open Banking. The recommendations of the CMA will be taken into account in the design of a future entity that will succeed the Open Banking Implementation Entity (OBIE). The future entity would build on the significant progress made to date by OBIE to encourage innovation and support competition in retail banking.

The CMA, Her Majesty’s Treasury, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) also issued a joint statement today outlining their plans for oversight of the future entity, building on recommendations of the CMA, including the creation of a joint regulator. Supervisory Committee.

The UK is a world leader in this area and as of January 2022 there were over 5 million users of services powered by Open Banking technology. It has been estimated that by September 2023, 60% of the UK population will use Open Banking payments.

The CMA launched a public consultation on the future oversight of Open Banking in March 2021. The consultation sought views on the arrangements to be put in place to ensure effective oversight and governance after the implementation of the remaining measures of roadmap required under the CMA order. for Open Banking; and how CMA should manage the process of transitioning to this new governance model. The CMA carefully considered the responses to the consultation before publishing its response.

The recommendations of the CMA are that the future entity should:

  • have effective regulatory oversight, with a new joint regulatory oversight committee to agree and implement next steps jointly led by FCA and PSR;
  • have independent and responsible leadership, with a majority of independent directors on its board;
  • have a clear objective articulated by the board;
  • have adequate resources to carry out its functions through a broader and sustainable funding model;
  • effectively serve the interests of consumers and small and medium-sized businesses, including considering how these groups will be represented in the governance of the entity;
  • be sustainable and adaptable to the future needs of the sector;
  • have a system in place to effectively support the monitoring and enforcement of the Retail Banking Market Inquiry Order 2017.

The joint statement issued today specifies that the Joint Regulatory Oversight Committee will develop proposals for the design of the future entity by the end of 2022.

Andrea Coscelli, Chief Executive Officer of CMA, said:

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 appropriate future arrangements to stimulate 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.

In 2017, Open Banking was launched in the UK as part of a remedial package following the CMA’s retail banking market investigation. The CMA ordered the 9 largest retail banks in Britain and Northern Ireland to pay and set up an independent Open Banking Implementation Entity.

Open Banking allows individuals and businesses to securely share their banking and credit card transaction data with trusted third parties who are then able to provide them with applications and services that save them time and money. In a market where large, established banks have accounted for more than 80% of the current account market for many years, Open Banking encourages account switching and lowers costs for small and medium-sized businesses, driving competition and innovation. .

Notes to Editors

  1. The CMA’s response to the consultation on future oversight of Open Banking, published today, also takes into account the findings of Alison White’s report on a number of OBIE-related allegations; to the implementing agent at the time; and some current and former OBIE senior staff. The investigation concluded that the OBIE had not been properly managed and that a lack of proper corporate governance had directly contributed to this.
  2. As part of the CMA’s response to Alison White’s review, on November 23, 2021, the CMA appointed Kirstin Baker, an Independent Non-Executive Director of the CMA, to lead a review to identify lessons for the AMC in its approach to the design, implementation and follow-up of corrective measures in its market investigations. The review should be completed within six months of launch and its findings reported to the CMA Board of Directors and published. The MAC will consider the implications of the review’s findings for the future governance of Open Banking once the findings are released later this year.
  3. In TrueLayer’s 2021 report, “The Future of E-Commerce Payments”, it was estimated that on its current growth trajectory, 60% of the UK population will be open banking users by September 2023.
  4. All media inquiries should be directed to the CMA Press Office by email at [email protected] or by telephone on 020 3738 6460.

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