UK Finance has supported the development of the ecosystem right from the beginning, and will continue to champion Open Banking for all stakeholders, innovators and users involved in this journey.

As adoption continuing to increase, the power of technology will further innovation. We see great opportunities in the Commercial Variable Recurring Payments space and will work with all enthusiastic stakeholders across the ecosystem to ensure that Open Banking payments drive greater payment choice for customers and merchants, and plays a growing part in the vibrant world of payments.  

Everyone in the ecosystem has a role to play in building on what we have created so far. The regulators will soon deliver its views and output, which we see as critical to enabling and unlocking Open Banking. Nevertheless, it is equally important for the market to have the space to innovate and ultimately deliver the great products and services users seek, supported by an equitable and sustainable model.

JROC and the Next Phase of Open Banking

In April the Joint Regulatory Oversight Committee (JROC) released its “Recommendations for the next phase of open banking in the UK. The FCA and the PSR have been intensively developing the Future Entity and  Commercial Variable Recurring Payments (cVRPs) respectively. UK Finance is actively contributing to this work and fully support JROC’s objectives which are to:

• Establish a sustainable and competitive footing for the ongoing development of Open Banking.
• Unlock the potential for Open Banking payments.
• Adopt a model that is scalable for future data sharing propositions.

Future Entity – Funding and Services

The “Future Entity” is the body that will take over from Open Banking Ltd. We firmly believe that the funding of the Future Entity should be based on a fair and equitable model that does not impose an undue cost on the industry.

The Future Entity should focus on maintaining existing, and developing new, Open Banking standards, and governance should be established to allow Open Banking Limited to undertake work not mandated by the CMA order.

A key principle is that the market should always be given an opportunity to develop approaches and/ or solutions when developing the Open Banking framework. This will reduce the cost of the Future Entity and support innovation. JROC should robustly review the delivery of services (including the directory) to establish what the ecosystem actually needs, and what could be offered out to the market.

In addition, while Open Finance and Smart Data are important initiatives, they should be considered (for now at least) separately to the development of open banking, given we do not know if their own governance will make use of the Future Entity.

Commercial Variable Recurring Payments (cVRPs) – A New Payment Method

cVRPs are a form of payment instruction that can be set up and used to make a series of future payments. We fully support cVRPs given they have the potential to bring a number of benefits including (i) providing more choice and competition and (ii) allowing customers more control over their payments.

Our key principles for the development of cVRPs include:

1. The contractual framework should be developed by the industry, and should be regarded as a stepping stone towards delivering JROC’s longer-term vision.
2. Appropriate customer protections are critical, and will require a deep legal analysis of the risks.
3. The future pricing model must have legal certainty, and be conducive to promoting innovation, competition, and good customer outcomes.

More generally, we would like to re-emphasise the importance of the market having an opportunity

to develop approaches to progress open banking; this could potentially operate as a partnership

where industry fully engaged and able to develop the approach/solution, and the regulators can then

provide much needed certainty (e.g. through legislation). There is now an agreed “Blueprint” for cVRP, and we expect to see a final report on the Future Entity before the end of the year.

By balancing all interests, the regulators, stakeholders, and industry together can secure the best possible outcome for the Open Banking ecosystem.