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Prime Minister Rishi Sunak’s decision to call a snap UK general election on July 4 has resulted in the long-awaited Data Protection and Digital Information (DPDI) bill falling, while the Home Affairs Select Committee has failed to sign off its inquiry into fraud.
With parliament now dissolved for the election period, key legislation that would have affected payment service providers (PSPs) has not been passed.
The DPDI Bill was set to be the foundation for open banking’s long-term regulatory framework.
For example, the Joint Regulatory Oversight Committee’s recent report on the future of open banking had shown it was to replace Open Banking Limited, the standard setter and responsible implementation entity, with a new entity. This had been premised on the passage of the legislation.
The opposition Labour Party, which is likely to win the election, has been enthusiastic about the potential of open banking and open finance previously. The bill could therefore be passed after the elections, perhaps with amendments taking out some more controversial clauses.
For example, Labour may be more keen to ensure alignment with the EU’s General Data Protection Regulation (GDPR), considering business anxieties about trade friction. EU lawmakers in Brussels have already previously expressed concern about the DPDI’s data protection clauses and whether they will maintain alignment.
In addition, MPs from the Labour Party and elsewhere had previously been critical of clauses in the DPDI that meant PSPs would be made to “spy on 23 million individuals in the welfare system”.
MPs fraud inquiry closes early
Meanwhile, the upcoming general election has also meant that the cross-party Home Affairs Select Committee's inquiry into fraud has come to an end.
Although the committee will not be able to write a full report, parliamentarians have written to the Home Secretary (currently Conservative MP James Cleverly) to highlight some of their findings.
This includes a call for social media companies to be held more accountable for fraud. Here, parliamentarians have said that the voluntary Online Fraud Charter does not go far enough to incentivise these firms to act now to reduce the fraud occurring on their platforms.
“Although measures being introduced under the Online Safety Act are an important step towards that, we believe more specific and targeted action is required from online firms to prevent fraud from happening in the first place,” the MPs said.
The select committee recommended that the Home Office needs to review the progress made by firms signed up to the Online Fraud Charter and ensure that those firms that have failed to implement measures by summer this year are required to do so before the end of 2024.
“We also strongly urge the government to consider introducing a fraud levy on social media companies, the funds of which can be used to compensate victims of fraud,” the letter says.
Another recommendation is for the government to implement a more joined-up approach to tackling fraud and white collar crime in the UK.
The current fragmented approach has resulted in a “responsibility vacuum”, according to the letter.
The Fraud Strategy missed an opportunity to enhance coordination and centralisation of both policy-making and enforcement resources.
The select committee has also said that the government needs to clarify the roles and responsibilities of key bodies involved in combating fraud to provide certainty about accountability and reporting lines.
For example, one recommendation is that the Home Office should establish a clear governance and oversight structure to coordinate activities across multiple departments, ensuring a whole-system approach to tackling fraud.
Economic crime, including fraud, meanwhile, should be managed within a dedicated, singular ministerial portfolio, the regulator said.
