Pressure builds on CMA as decision on Open Banking's future imminent

Fintech leaders have accused the CMA of “jeopardising” the UK’s open banking “pole position on the global stage” by failing to provide clarity on the future of the OBIE as well as a definition and timeline on the rollout of sweeping for Variable Recurring Payments (VRPs).

The Competition and Markets Authority (CMA) could decide on the future of the Open Banking Implementation Entity (OBIE) as soon as next week, AltFi understands, amid criticism from fintech leaders over delays by the competition regulator on key decisions on the future of open banking.

Fintech leaders have accused the CMA of “jeopardising” the UK’s open banking “pole position on the global stage” by failing to provide clarity on the future of the OBIE as well as a definition and timeline on the rollout of sweeping for Variable Recurring Payments (VRPs).

GoCardless, Moneybox, Plaid were among 26 fintechs along with industry body Innovate Finance which signed an open letter to the CMA this week, expressing concern over the delay.

They said that failing to provide clarity on these two issues meant the UK’s open banking regime risked “falling behind as other international markets progress towards open finance”.

The coalition of fintechs was convened by the Coalition for a Digital Economy (Coadec) and Innovate Finance.

Following the criticism, the CMA clarified its definition on VRPs for sweeping, but it has yet to publish details on the future of the under-fire OBIE which has been hit by governance failings,  despite pressure from fintech leaders.

However, AltFi understands from a source close to the discussions is that the announcement on the future of the OBIE could come as soon as next week.

The CMA began consulting on the future of the OBIE in March last year.

But in November last year, the CMA revealed that the recent report into the governance failings of the OBIE and appointment of a new Trustee had led it to delay publishing its direction on a future entity to succeed the OBIE. 

The OBIE is currently being overseen by Charlotte Crosswell, who previously led the fintech membership group Innovate Finance.

Meanwhile, by providing clarity on sweeping for VRPs, it means that the OBIE can test its plans for sweeping.

VRPs are a type of open banking API, which use open banking rails to connect banks to Third Party Providers, while sweeping is the transfer of funds between a customer’s own accounts.

“The CMA believes that the update published today provides the clarity necessary for the OBIE to take views on the specific use cases that fall within the scope of the order where the position was previously unclear,” a spokesperson from the CMA said.

Fintech leaders had warned that the delay in clarification on sweeping for VRPs meant that key developments and commercial negotiation were on “pause”.

It said that “in many cases, potential clients would rather wait and see than act now out of fear their use case will not be in the scope of the sweeping definition”.

It added that “these factors mean that the industry as a whole is at an increased risk of being unable to deliver VRP in July”.

Despite the clarification on sweeping for VRPs, fintechs still expressed concern.

Jack Wilson, head of public policy at TrueLayer, said: "While it is encouraging to see the CMA once again acknowledge the value of VRP in creating fairer financial markets, we are also concerned that the full potential of VRP products and services is limited not by technology, but by the legal powers which CMA can execute. 

“We are determined to see the benefits of VRP realised as broadly as possible, and will continue to explore ways to do this. In that regard, we also stand ready to work with the relevant authorities and the broader fintech sector to ensure that the value of VRP can become a reality for all UK consumers."