The competition watchdog is set to unveil a new committee of regulators tomorrow to oversee the rollout of open banking technology, after sustained pressure from fintechs to speed up its decision making, City A.M. has learned.
In a joint regulatory statement tomorrow, the Competition and Markets Authority will announce that open banking regulation will now be overseen by a new Joint Regulatory Oversight Committee (JROC) chaired by the Financial Conduct Authority and the Payments Service Regulator, with the CMA and Treasury attending as members, according to four people close to the announcement.
Sources told City A.M that the new JROC will oversee the governance of the open banking and the long-term regulatory framework of the technology, with the potential to take on a funding role as well at a later date.
Open banking was introduced in 2018 to free up data sharing and drive competition in finance, and the technology has been touted by fintechs as essential to driving innovation in the sector.
But fintech firms have accused the CMA of dragging its feet on a number of key areas including clarifying a future for the open banking implementation body, the OBIE.
The OBIE will continue to operate alongside the new oversight committee in an advisory capacity due to the depth of its expertise, City A.M understands.
But sources said there was still a huge amount of uncertainty about how the open banking would evolve into its goal of ‘open finance’, where consumers have the ability to consent to sharing data across all financial services platforms.
“It’s still not clear how the hell we get to open finance,” one source told City A.M.
The Coalition for a Digital Economy, which has been campaigning for the CMA to speed up its decision making on open banking, said the announcement was a welcome step but the potential of the technology would still be limited.
“We are not surprised that the announcement brings us no closer to open finance. For months, industry has looked to this moment as setting the path to the opening up of new datasets but the elephant in the room is the lack of any concrete mandate to do so,” said Charlie Mercer, Head of Economic Policy at Coadec.
“Until there is a clear, political mandate for the expansion of open banking, the potential of this technology will be limited, and at Coadec we fear this means our world leading open banking regime could be surpassed by markets elsewhere, perhaps even the EU.”
Mercer said that the next step would be to set out a Smart Data Right in primary legislation, which would “inject rocket fuel into the nearly 300 providers already bringing life to open banking, and lead to the next 5 million consumers jumping on board.”
The CMA declined to comment.