New entity to oversee open banking

Open Banking enables consumers and businesses to share their bank and credit card transaction data securely with trusted third parties who are then able to provide them with applications and services.

It was launched in the UK in 2017, following the CMA’s market investigation into retail banking. It ordered the nine largest retail banks in Great Britain and Northern Ireland to set up an independent Open Banking Implementation Entity (OBIE).

The new plan maps out the best means to design a future entity to succeed OBIE.

It agreed that the Joint Regulatory Oversight Committee should be led by the FCA and PSR, to consider the new entity’s vision, governance and priorities. It further agreed it should be independent, and that it should play a central role in developing new proposals beyond those required by existing regulations.

The move comes following the CMA’s launch of a public consultation on the future of open banking in March 2021, in which it sought views on the best means to ensure a smooth transition process towards a new governance model.

The CMA’s recommendations were that the future entity should possess regulatory oversight, and the new Joint Regulatory Oversight Committee should agree and implement next steps, led by the FCA and PSR.

It further recommended the entity is afforded independent and accountable leadership, with a board comprising majority independent directors, and that it carries out its functions through a more broadly-based, sustainable funding model.

A system to support the enforcement of the Retail Banking Market Investigation Order 2017 was also endorsed.

The Joint Regulatory Oversight Committee will draw up proposals for the design of the future entity by the end of 2022.

Andrea Coscelli, chief executive of the CMA, said:

“The CMA has carefully considered the appropriate future arrangements to boost Open Banking so that its significant benefits can be realised even more widely.

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