JROC sets out recommendations for next phase of UK Open Banking

The Joint Regulatory Oversight Committee (JROC) has published its recommendations for the next phase of Open Banking in the UK, including a roadmap of 29 actions to be delivered over the next two years, covering five key themes.

JROC, which is co-chaired by the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR), said its vision for Open Banking in the UK is to create an ecosystem that, “through industry action and strong regulatory direction, builds commercial arrangements that are fair and proportionate for a multitude of new products and services with a broad-based and equitably funded Open Banking entity”.

In order to achieve this vision, JROC has set out three priorities, which include unlocking the “potential” for Open Banking payments and adopting a model that is “scalable” for future data sharing propositions.

The Committee also revealed that the transition to the UK’s Open Banking future entity is expected to start later in 2023, and set out the next steps which need to be taken in designing it.

However, JROC confirmed that in order “to sustain momentum, we will not wait until the future entity is in place to unlock Open Banking’s further potential”.

In the meantime, the Open Banking Implementation Entity (OBIE) will undertake some of the non-Order activities outlined in JROC’s report, such as improving data collection for financial crime and API availability, alongside Order activities, until the new entity is in place.

Open Banking in the UK is in an “interim state” currently, having completed in January 2023 the Open Banking Order, as mandated by the Competition and Markets Authority.

The interim state will come to an end once the UK government has established a long-term regulatory framework, which will set out the role of the Treasury and the respective roles that the FCA and PSR will have in providing oversight across the Open Banking ecosystem.

New generation of products and services

“Open Banking can be a UK success story and we want to help it grow and develop sustainably,” said Committee co-chairs, the PSR’s managing director, Chris Hemsley, and FCA’s executive director, consumers and competition, Sheldon Mills.

Sheldon Mills, executive director, consumers and competition, FCA

“Today’s report sets out a roadmap and the framework for delivering the next phase of Open Banking.

“Only through effective collaboration can we deliver on our ambition and develop Open Banking in a way that promotes continued innovation and competition, for the benefit of consumers, businesses, and the wider economy,” Sheldon and Hemsley added.

The five key themes identified by JROC in its recommendations include levelling up availability and performance; mitigating the risks of financial crime; ensuring effective consumer protection if something goes wrong; improving information flows to TPPs and end users; and promoting additional services, using non-sweeping variable recurring payments (VRP) as a pilot.

Andrew Griffith, City Minister, said: “Britain leads the pack in Open Banking, with seven million users, but we can’t sit back and put our feet up.

“Today’s plan will deliver a new generation of products and services, making banking more accessible and convenient for millions of people.”

Measure of success

In its recommendations report, JROC revealed it intends to measure “success” in UK Open Banking in the long run by looking at the growth of the ecosystem, including the number of products and services offered, the increased use and reliance on Open Banking by consumers and businesses, the significant increase of total number of customers, and the overall growing investment in Open Banking.

Another measure it plans to record is in terms of “a low number of incidents and issues, the way in which those are resolved, and the scale of any resulting customer loss”.

Over the next two years, JROC a measure of the success of Open Banking will be through stakeholders’ commitment and the delivery of the actions in its report, including the testing and piloting of a commercial model, and the establishment of the future entity.