The Competition and Markets Authority (CMA) has published its recommendations for the future oversight and governance of the open banking sector in the UK.
The CMA previously launched a public consultation of the future oversight of open banking back in March 2021. The consultation sought views on what specific arrangements should be put in place to ensure oversight and governance is effective and follows the implementation of the remaining measures in the roadmap required under the CMA’s Order for Open Banking.
When it comes to open banking, the UK has been a global leader. In January of this year, it was found that there were over 5 million users of services powered by open banking technology. Up to 60% of the UK population are estimated to be using open banking payments by September 2023.
The recommendations made in the consultation are that the future entity should have effective regulatory oversight, with a new Joint Regulatory Oversight Committee to agree and implement the next steps led jointly by the FCA and PSR. The entity should also have independent and accountable leadership with a majority of independent directors on its board.
The consultation recommended also that the entity should have a clear purpose articulated by the board and be adequately resourced to carry out its functions through a broad-based and sustainable funding model. The regulatory entity should additionally serve the interests of consumers and SMBs – including consideration for how these groups will be represented in the governance of the entity – and be sustainable and adaptable to the future needs of the sector.
The last recommendation provided was that the entity should have a system to effectively support the monitoring and enforcement of the Retail Banking Market Investigation Order 2017.
The CMA, HM Treasury, Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) have also published a joint statement detailing their plans for for oversight of the future entity, building on the CMA’s recommendations, including the establishment of a Joint Regulatory Oversight Committee. The proposals, the CMA claims, will be revealed by the end of 2022.
CMA CEO Andrea Coscelli said, “Open Banking has been a major success in the UK, bringing innovative new services to retail banking and benefiting consumers, businesses and the UK economy.
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.”
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