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The Financial Conduct Authority (FCA) has issued a statement setting out the standard-setting body’s likely responsibilities.
The Feedback Statement (FS25/4) explains that the Future Entity is likely to be the industry’s main benchmark-setting body.
It will be responsible for developing and enforcing common standards on minimum service levels and interoperability across open banking, as well as monitoring application programming interface (API) performance.
Entity takes shape
Outlining the Future Entity’s structure, the regulator said it would provide directory and certification services and, together with multilateral agreement owner/operators, develop standards for commercial schemes.
The Future Entity is expected to be a company limited by guarantee operating on a not-for-profit basis, with revenue collected equitably from its users and beneficiaries.
Subject to legislation, the regulator does not expect the entity to be a public body with enforcement powers, but rather a company limited by guarantee, with board appointments made by an independent committee.
Commercial schemes will be handled separately, the regulator confirmed.
Room to grow
The FCA left open the possibility that the Future Entity could expand its role into open finance.
It envisages a competitive layer of commercially operated open banking schemes that develop the rules governing firms.
The commercial schemes are likely to be industry-led and may or may not be for profit.
They are expected to use the common API standards developed and overseen by the Future Entity to ensure interoperability, although commercial scheme operators may innovate beyond these standards to provide premium services.
The FCA does not expect the Future Entity to own or operate open banking commercial schemes, although it may intervene if market failures or insufficient commercial incentives arise.
The regulator also said it expects the Future Entity and commercial scheme operators to be regulated as interface bodies under the Data Use and Access Act (2025).
Preparatory phase
As part of its preparations, the FCA said it plans to hold a series of workshops over the summer and autumn to explore the details of the Future Entity.
It expects to be in a position to share more information by the end of the year.
Open banking is currently at a crossroads in the UK, but is central to the National Payments Vision and at the heart of the FCA’s five-year strategy to support the government’s economic growth agenda.
The government has previously said open banking has “significant untapped potential” and a vital role to play in improving payments infrastructure and delivering seamless user experiences in the near term.
However, the success of open banking in the UK depends on its long-term framework, with the standard-setting Future Entity playing a key role.
The regulator’s decision to design the Future Entity as a not-for-profit limited company rather than a public body, with the ability to operate commercial schemes, positions its strategy midway between a fully state-owned and led organisation and a voluntary, market-led solution.
This approach likely reflects a desire to combine the operational agility and commercial flexibility of a limited company with the safeguard-focused features (not-for-profit status, FCA oversight) typical of a public interest organisation.
The regulator seems to be trying to avoid full government bureaucracy and foster sustainable, effective market infrastructure.
Leveraging the strengths of public and private sector approaches while mitigating their weaknesses is a plausible goal, but it remains to be seen how effectively the Future Entity achieves it.
