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The UK Joint Regulatory Oversight Committee (JROC) is setting up dedicated workstreams to take forward recommendations for the next phase of open banking in the UK.
UK regulators have moved to create dedicated workstreams to action the six key themes and priorities outlined in the committee’s April recommendations.
As part of this effort, the JROC will launch two new working groups on variable recurring payments (VRPs) and a future open banking entity.
“This work is crucial in realising the full potential of open banking in the UK,” said the regulators.
The VRP working group will be chaired by the Payment Systems Regulator (PSR) and will work to establish a blueprint for implementing non-sweeping VRPs.
The Future Entity working group, to be chaired by the Financial Conduct Authority (FCA), will analyse and help develop the options and design for the future entity. This will include recommendations in relation to the role, structure, funding and governance of the future entity.
Both working groups will kick off work by the end of June and will have to hand in the results of their work by September 2023.
The JROC, which comprises the FCA, the PSR, the Competition and Markets Authority and HM Treasury, has also tasked Open Banking Limited (OBL) to lead and coordinate workstreams on four of the other key themes.
These consist of levelling up availability and performance; mitigating the risks of financial crime; developing proposals for dispute processes; and improving information flow to third-party providers (TPPs) and end users.
Efforts here will ensure “the correct foundations are in place for open banking to grow in a safe and sustainable way”, according to the co-chairs of the JROC, PSR’s managing director Chris Hemsley and FCA’s executive director, consumers and competition, Sheldon Mills.
Although user adoption of open banking-based services has grown significantly in recent years, it is still a relatively modest share of the general population.
According to figures from last June, around 10-11 percent of digitally-enabled consumers are active users of an open banking service, up from 6-7 percent the year before.
Speaking at a VIXIO webinar in April, Andrew Self, policy manager at the PSR, said "performance and functionality need to be beyond where they currently are" if the industry wants to see more retail transactions carried out via open banking.
“I think we have set out quite an ambitious plan for the next phase of open banking,” acknowledged Self.
The agency will first push for implementing those features where there is “broad industry consensus”, such as better data in terms of API capability and fraud, and will move to “interim” deliverables where there is “still contention in the industry”, Self told the audience.
He described VRPs as “a stepping stone towards that long-run, sustainable framework for open banking”.
“We want to learn and understand, through that interim step, what needs to happen to make the long-run framework.” Topics in that phase would include dispute processes and liability frameworks and ensuring that the availability of APIs is there, Self said.
As reported by VIXIO, industry players welcomed the JROC’s recommendations and roadmap of priorities in April.
"These recommendations establish a clear route-map that recognises the importance of all entities — including the regulatory authorities — to collaborate," said Paul Rodgers, chief executive at trade association Vendorcom.
Todd Clyde, chief executive at Token.io, called it “a significant milestone” and “opportunity for all open banking stakeholders in the UK”.
