UK announces new open banking Oversight Committee… but no clarity on open finance

The Competition and Markets Authority (CMA) has finally revealed its long-awaited decision on the future governance of open banking.

Today, in a joint announcement between the Financial Conduct Authority, the Payments Service Regulator, The Treasury and the CMA, an entirely new Joint Regulatory Oversight Committee (JROC) was introduced.

The JROC will oversee the governance of open banking going forward, taking over from the CMA, and will be responsible for the long-term regulatory framework of open banking and open finance.

Essentially the JROC will design the ‘new entity’ which the Open Banking Implementation Entity (OBIE) will transition into, in order to lead the UK’s development of open banking and open finance.

“The CMA has carefully considered the appropriate future arrangements to boost Open Banking so that its significant benefits can be realised even more widely,” said Andrea Coscelli, CEO of the CMA.

“We have today outlined the core principles that will ensure the new entity successfully picks up the reins.”

The JROC will draw up its proposals for the future entity by the end of 2022, and will oversee the new entity once it’s set up.

Charlotte Crosswell, Trustee of the OBIE welcomed the announcement and said: “We will look forward to working with the new Joint Regulatory Oversight Committee over the course of this year.”

Unfortunately, according to Maria Palmieri, head of public policy at Yapily, “many questions still remain around the future of Open Banking in the UK”.

“With the current mesh of regulators, it is almost impossible for fintechs, banks and open banking providers to plan for the future.”

Palmieri called for the creation of a formal open finance framework and more guidance on the future role of the OBIE.

“These steps would turbocharge further adoption of open banking solutions ensuring better and fairer financial services for everyone.”

Meanwhile, TrueLayer's UK public policy lead Bee Thakur called on JROC to "use its collective powers on pressing issues such as the development of variable recurring payments (VRP) beyond sweeping".

"This will help us to continue to innovate and develop world class products and services, and in doing so create fair financial markets which give UK consumers the best choices.”

Analysis

The journey to open finance was never going to happen overnight.

Today’s announcement from the CMA is firmly focused on handing over the regulatory oversight of a burgeoning open banking industry, a role which the competition regulator was ultimately unsuited to fill.

With the JROC—another terrible industry acronym—we have clarity at least on ‘who’ will be making the crucial decisions.

What we didn’t find out and still don’t know is ‘what’ open finance will be.

For that, we’ll just have to wait a little longer.