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An investigation into complaints made at the Open Banking Implementation Entity (OBIE), the not-for-profit organisation set up to develop industry standards and guidelines to help usher in open banking in the UK, has found it allowed a culture of bullying and intimidation to prevail.
The investigation, which was led by Alison White, a non-executive with experience in corporate governance for the Competition and Markets Authority (CMA), also found there was a failure to properly manage conflicts of interest at the organisation, concluding that although it did not find any evidence that this was exploited for private gain, there was an unacceptable risk that it might have done so.
The first casualty from the fallout of this report was Imran Gulamhuseinwala, trustee and chair, who resigned. This was part of a number of changes to the OBIE announced by the CMA. Others include the nomination of Charlotte Crosswell, the former CEO of Innovate Finance, to replace Gulamhuseinwala and to lead a new transitionary era, and the appointment of new non-executive directors to the OBIE board to provide independent scrutiny and oversight.
The CMA also said the “findings of the Alison White investigation will be taken into consideration in relation to the future governance arrangements for open banking”, and that “Kirstin Baker, an independent non-executive director of the CMA, has been appointed to lead a review to identify the lessons for the CMA in its approach to designing, implementing and monitoring remedies in its market investigations”.
The investigation interviewed a number of existing and former employees, describing a toxic workplace culture, including “a number of incidents of alleged bullying and harassment” and conduct which it is claimed might be unlawful under the Equalities Act. Among incidents cited, it noted potentially racially motivated and sexist bullying.
The CMA were also signalled out for criticism in the investigation: “CMA, and the nine retail banks (CMA9) who helped establish OBIE, must accept their share of responsibility for not putting in place stronger governance mechanisms from the outset, for lack of attention to issues of governance throughout the programme and for not improving the governance when it became clear that the project was becoming more complex and far longer than originally anticipated.”
The Retail Banking Market Investigation Order 2017 mandated the delivery of an open and common banking standard, which is where the OBIE was born. However, the report states there was very little in this order around the governance of OBIE, other than a framework for agreeing the governance of the entity with the CMA9. It is claimed that this is because the organisation was only expected to exist in the short term to help deliver API standards, rather than the longer-term wider remit it ultimately took hold of.
Impact on Open Banking Confidence
The UK has been a major global frontrunner in the development of regulated open banking services, which is also increasingly becoming a reality in many other parts of the world. Open banking is seen as an important step for policymakers to help deliver innovation and competition in banking and payments, ultimately helping to reduce costs and fees.
However, take up of open banking services, particularly with regard to payment initiation services (PIS), is still low. According to OBIE’s own data, total number of successful payment initiations using Open Banking APIs totalled just under 17m in the year ending August 2021. Although it is growing fast (successful payments were up 483 percent in August 2021 compared with the same month in previous years), considering there were 29bn non-cash transactions in the UK in 2020, this is a tiny proportion.
Much of this is to do with the still embryonic nature of these services, but it is also true that consumers remain confused at what open banking means. As VIXIO reported on Monday from Dan Scholey, chief operating officer at QR payments platform MoneyHub Enterprise: “Still, three years on, we should be doing much better, yet survey after survey shows consumer awareness is limited and even those who have heard of open banking are confused about its purpose and benefits.”
Open banking is ultimately about putting the consumer in control of their data by allowing them to give permissioned access of their information to third parties. The potential to disrupt and radically change how consumers pay and manage their money could be significant. However, reports of toxic workplaces and potential conflicts of interest in the organisation charged with setting the data standards for these services is only likely to erode further consumer confidence in open banking.
