Open Finance has taken a giant leap forward in the UK

In the seminal political satire The Thick of It, there is an early episode where the Minister for Social Affairs gleefully convenes a press conference to announce a policy that the PM has said the Government should do. 

He is promptly told not to announce anything by infamous enforcer Malcolm Tucker, prompting the Minister to declare to an assembled audience, precisely, nothing. In classic Thick of It fashion, the PM then decides to back the Minister’s idea prompting a farcical ring around of the Nation’s press to remind them of the announcement, “in case they missed it”. 

Those in the Open Banking ecosystem that watched Prince Charles open Parliament on May 10th may “have missed” something pretty critical: open finance took a giant leap forward. 

Now, all that Prince Charles actually said was: “the United Kingdom’s data protection regime will be reformed” - which doesn’t tell us much Similarly, the briefing notes only gave a little more away, stating that an objective of the forthcoming Data Reform Bill will be to “increase industry participation in Smart Data Schemes, which will give citizens and small businesses more control of their data.” 

In conversations since, however, Coadec was delighted to hear that what this could entail is far more transformative. 

The Department for Business, Energy and Industrial Strategy (BEIS) has said that the Government will fulfil its commitment to legislate to extend the government's ability to mandate industry participation in Smart Data across the economy. In plain English, this means that they will pass laws to lay the foundations for open finance, open telco, open energy and beyond. 

Under the overarching goal to improve consent-driven data portability across the economy, the Government has four objectives through this legislation. First, to help overcome information asymmetry between suppliers and customers - i.e give consumers more control. Second, empower customers to make better use of their personal data, such as by enabling product comparisons and providing access to better deals. 

Third, supercharge competition to ensure all customers will benefit from lower prices and higher quality goods and service delivery. And finally, unleash innovation, providing new services in and across the sectors to help consumers save and manage their money and services. 

So what does this actually mean? Over the next parliament, we should take a big step closer to open finance and beyond. It means that while the Joint Regulatory Oversight Committee (JROC) mulls over the future of the Open Banking Implementation Entity (OBIE), legislation will equip Secretaries of State to lay down secondary legislation which then compels firms to act in sectors they are responsible for. 

Despite the countless webinars, conference panels and OpEds that take the journey to open finance and beyond as a given, at Coadec we’ve been pointing out for some time that there has so far been no legislative mandate for any of it. 

We are also unconvinced by the desire of incumbent businesses to proactively open up data sets at pace and at high quality: it’s costly after all and could erode away at market dominance. 

This announcement changes the equation. If all goes to plan, the UK would be one of the first countries in the world to have a legislative framework that could lead to open data schemes across the entire economy. But, in case you missed it, this primary legislation will not mandate any specific data sets to open up: we won’t get open finance with it alone. 

That task is left to the relevant Secretary of State, meaning BEIS will pass the open finance baton on to Her Majesty’s Treasury. 

Against a tumultuous political backdrop, it is excellent that enabling legislation for Smart Data is on the way and is a priority for the Government. While there is still some way to go before consumers can benefit from the promise of open finance, at least now we have our map to get there.

The views and opinions expressed are not necessarily those of AltFi.