UK government and regulators need to take ‘decisive action’ after release of SWG’s final report

UK Open Banking ecosystem members have called for “decisive action” from the UK government and regulators, and said the industry now needs to “collaborate” on recurring payments, following the Strategic Working Group’s (SWG’s) final report to the Joint Regulatory Oversight Committee (JROC).

The report, published earlier this week, is the outcome of discussions between industry stakeholders, which took place in the last few months of 2022.

Their views, insights and analysis will inform JROC’s recommendations on the vision for Open Banking in the UK, due to be set out, alongside the design of the future entity, in the first quarter of 2023.

Tom Burton, director of external affairs and public policy at GoCardless, said: “The SWG process has been valuable for bringing all parties together and debating the issues.

“There’s broad agreement that Open Banking has made great strides to date and has huge potential, but decisive action by the government and regulators is now required if we are to realise these ambitions and unlock the opportunities and investment that come with it.”

He added that while there remained a lot to do, “cracking on” with establishing OBIE’s successor, ensuring the current standards apply across all market participants, fixing reliability and consistency issues, and building out variable recurring payments (VRPs) “would be a great place to start”.

The SWG reported that “expert advisers” and some ASPSPs recommended ensuring that “a liability framework and customer protection regime (including redress mechanisms) is in place before extending VRPs beyond sweeping”.

Token CPO Charles Damen

Charles Damen, chief product officer at Token, said: “VRP for non-sweeping services is one of the promising steps in the evolution of Open Banking payments.

“It will enrich and unlock a wider range of payment use cases, from today’s single immediate payments to the future of frictionless e-commerce payments, as well as recurring payments for both fixed and variable amounts.”

The report also set out several possible options for the pricing of VRPs, including that access to VRPs should be free in line with other payment initiation services; commercial agreements should be market-driven; price, or a price cap, should be set by an appropriate regulator; or that commercial fee arrangements should be set centrally by an independent body.

Damen added: “Banks had to build the VRP infrastructure as part of the CMA’s OBIE compliance mandate. By enabling non-sweeping services, banks now have a major opportunity to leverage that infrastructure and monetise that investment.”

He said that with banks, third party providers and merchants aligned on the opportunity that VRP brings, the industry now needs to “collaborate to ensure that we build the right commercial and regulatory framework to unlock that opportunity”.

The Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR), co-chairs of JROC, reiterated the committee’s determination to ensure that the benefits of Open Banking are “fully realised, and momentum is sustained”.

Sheldon Mills, executive director, consumers and competition, FCA

In a joint statement, Sheldon Mills, FCA’s executive director, consumers and competition, and PSR’s managing director, Chris Hemsley, said: “Open Banking and its future continue to be a joint priority. As the SWG’s work ends with the report, the committee’s work on Open Banking and engagement with industry and broader stakeholders continue.

“Fully realised, Open Banking and then Open Finance can bring further benefits to consumers and businesses and will help the UK become more competitive and innovative.”

They also thanked Bryan Zhang, independent chair of the SWG, and the SWG Secretariat, as well as all participants.

Listen to GoCardless’ Tom Burton on the latest episode of Open Banking Expo Unplugged, along with Nilixa Devlukia, chair of the Open Finance Association.