Joint Regulatory Oversight Committee highlights 2023 progress and sets out future UK open banking plans

On December 18, 2023, the Financial Conduct Authority (FCA) issued a press statement to inform that the Joint Regulatory Oversight Committee (JROC) has provided an update on the advancements in open banking which aims to introduce a new generation of payment products and services in the UK to promote accessibility to banking services, foster inclusion, and enhance the entire banking experience of customers. Currently, the Committee is working on several fronts, including enhancing accessibility and performance, minimizing financial crime risks, safeguarding consumers, improving data flow, and encouraging the development of new services. The JROC is also focusing on establishing a sustainable future entity with independent governance and creating a corresponding long-term regulatory framework for open banking. According to the enclosed update, key achievements in the past year include the following:
– The JROC published a report in April 2023 outlining its recommendations for the future of open banking, focusing on creating an economically sustainable future entity with independent governance and developing innovative new services.
– The Committee has made progress on various workstreams as noted above.
– The JROC has made progress in collecting data on API availability and performance to gain insights into the performance of open banking services.
– The JROC has been working closely with stakeholders, including financial institutions, FinTech companies, and consumer groups, to develop and implement its vision for open banking and to create the regulatory framework needed to transpose this vision.
Furthermore, the FCA informs that the Committee has responded to the Variable Recurring Payments (VRP) Working Group’s blueprint on the phased rollout of variable recurring payments in the context of open banking and retail payment competition. Thereafter, the JROC agrees with the importance of expanding the use of VRPs beyond sweeping services and identifies three core use cases for the initial rollout of non-sweeping VRPs, including regulated utilities, regulated financial services, and payments to central and local government. The JROC also supports the establishment of a Functional Implementation Group and a Dispute Resolution Implementation Group and proposes a formal dispute resolution framework to monitor consumer protection for open banking payments as outlined in the document. The Committee is currently requesting industry input on the necessary components for the commercial model to facilitate this rollout.
Additionally, the FCA informs that the Committee has asked Pay.UK and Open Banking Limited to lead implementation groups to develop the required functional enhancements and dispute resolution mechanisms for consumers and businesses before the introduction of non-sweeping VRP next year.
The Committee is also evaluating the Future Entity Working Group’s suggestions for designing and implementing the future entity, which will play a crucial role in the success of Open Banking in the UK. A decision on the structure, governance, and funding model of the future entity will be announced early next year, followed by immediate steps to establish the entity in Q1 2024.