Open Banking's Succession 

July, 2023 - Shoosmiths LLP

While it may be arguable whether the announcement of the next phase of the UK’s open banking programme was as highly anticipated as the grand finale to HBO’s Succession, for the payment services industry a clear route to the future is much needed.

But are we any closer to understanding what that future may look like in the UK following the Joint Regulatory Oversight Committee’s (“JROC”) publishing its recommendations for the future of open banking (April 2023) and its programme of work in realising those recommendations (June 2023)? Much like any given coup the Roy siblings are running with on a particular day, the answer is not particularly straightforward.

Previously on… open banking

The current model of open banking in the UK is driven through the Open Banking Implementation Entity (the “OBIE”). The OBIE came about as a result of the Competition and Market Authority’s (the “CMA”) Retail Banking Market Investigation Order (published in 2017) (the “Order”) which directed some of the major UK banks to facilitate open banking by reference to a roadmap. The OBIE has, to date, been the key driver in implementing the Order and the accompanying roadmap.

The Order, and by extension, the OBIE, has always been a temporary solution to the development of open banking. It was for the CMA to announce when, in its opinion, the terms of the Order had been achieved by the major banks and the OBIE’s functions could transition to a successor body – which the CMA duly did in January 2023.

Laying the groundwork

Comprising of the Financial Conduct Authority (the “FCA”), the Payment Systems Regulator (the “PSR”), HM Treasury and the CMA, the Joint Regulatory Oversight Committee (the “JROC”) was formed to lead in formulating open banking’s future and picking (or rather, creating) the OBIE’s successor.

In April 2023, the JROC published its long-awaited recommendation paper on the next phase of open banking in the UK, guided by three key priorities to help realise its vision for open banking:

  • establishing a sustainable and competitive footing for the ongoing development of the open banking ecosystem;
  • unlocking the potential for open banking payments; and
  • adopting a scalable model for future data sharing propositions.

The JROC has identified a catalogue of actions needing to be taken between now and the end of 2024. If you need a reminder of what the programme of work being proposed looks like, the table below sets this out.

 Theme  Work activity  Owner  Timescales 
 Levelling up availability and performance  Design a data collection framework for API availability and performance, and submit to FCA and PSR for approval  OBIE (and the wider ecosystem)  Q2 2023
 Conduct the data collection and analyse data following FCA and PSR approval  OBIE  Q3 2023
 Consult on changes requiring reporting additional data for API availability and performance  FCA
 Q2 2024
 Mitigating the risks of financial crime  Assess conformance with the FCA’s existing guidance in relation to payment limits  ASPSPs  Q2 2023
 Design a data collection framework for financial crime and submit to FCA and PSR for approval  OBIE (and the wider ecosystem)  Q2 2023
 Conduct the financial crime data collection and analyse data following FCA and PSR approval  OBIE  Q3 2023
 Implement the use of open banking based data sharing in Faster Payments to reduce fraud  OBIE
 Q4 2023
 Implement effective financial crime prevention tools for third party providers and ASPSPs  OBIE (and its future successor)  Q1 2024
 Consider how API based data sharing can be broadened out beyond authorised push payment fraud and report findings to FCA and PSR  OBIE
 Q1 2024
 Consult on mandating data sharing,  the use of financial crime prevention tools (including data sharing) and/or additional tools or requirements for high value payments  FCA
 Q2 2024
 Ensuring effective consumer protection if something goes wrong  Perform a gap analysis of dispute processes  OBIE (and its future successor)  Q4 2023
 Consult on additional dispute process or protection requirements in open banking  FCA
 Q2 2024
 Improving information flows to third party providers  Perform a gap analysis of consistent and definitive payment statuses in Faster Payments and open banking  OBIE
 Q3 2023
 Consult on changes to error code requirements  FCA  Q4 2023
 Consider whether the alignment between open banking and Faster Payments error messages is needed  PSR  Q4 2023
 Consult to require consistent and definitive message regarding the payment status  FCA
 Q2 2024
 Promoting additional open banking services  Publish terms of reference for a working group on expanding VRP beyond sweeping use cases  FCA
 Q2 2023
 Publish a discussion paper on principles for commercial frameworks for premium APIs  FCA
 Q2 2023
 Draft a delivery plan and framework to enable a phased roll out of non-sweeping VRP  VRP working group  Q3 2023
 Consult on changes to Faster Payments to enable a phased roll out of non-sweeping VRP  PSR  Q4 2023
 Conduct consumer research to identify critical and future use cases and risks for (vulnerable) consumers  FCA
 Q4 2023
 Consult on requirements to support non-sweeping VRP roll out and/or to adopt a wider multilateral agreement for premium APIs  FCA
 Q2 2024


In short, it is an incredibly extensive and ambitious programme requiring contribution and collaboration from nearly all players within the payment ecosystem, with the OBIE (and its future successor) taking the lions share. The future of open banking in the UK will invariably rest on the successful implementation and outcomes this work generates. 

Evolution not revolution

June has seen the JROC waste no time in moving forward, not least because the timescales for the work are challenging to say the least. Working groups have now been formed focussing on the creation of the OBIE’s successor and the expansion of variable recurring payments, and the OBIE has been given a long to-do list. But can we expect a summer of revolution, which many in the industry feel open banking so desperately needs? Probably not. The FCA’s gaze is likely transfixed, at least for the short to medium term, on championing its latest industry-wide piece of regulatory change – the Consumer Duty. That remains talk of the town and one wonders whether open banking, and the scale of work needed to move it forward, remains in its shadow for the time being.

So, while we may not have a clear answer to what open banking will look like five years from now, we at least have a plan of action. What remains to be seen is how quickly government, regulators and participants are willing to move in the direction of travel. Stay tuned over the coming months, this story arc is not going to be wrapped up neatly anytime soon.


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