UK’s Financial Conduct Authority issues a “Call for Input” in respect of its vision to extend Open Banking to financial services more generally
The UK’s financial regulator, the Financial Conduct Authority (FCA), has issued a “Call for Input” in respect of its vision to extend Open Banking to financial services more generally (under the label of Open Finance). Unlike Open Banking, which is concerned with bank accounts and payment services only, the impact of Open Finance would be much wider, affecting mortgage providers, consumer credit firms, investment and pension funds, as well as general insurers and intermediaries.
Open Banking was introduced as part of the UK’s implementation of the EU’s Second Payment Services Directive (PSD2) that took effect on 13 January 2018. It allows customers to authorise third party service providers to access their payment account information and to make payments on their behalf. Open Banking originated as one of a package of measures imposed on the largest UK banks by the UK Competition and Markets Authority to increase competition in retail banking and to allow customers to benefit from technological advances.
Open Finance, like Open Banking, builds on the concept that customers who provide data should also be able to control such data. It takes this idea and seeks to apply it far more widely. Third party providers would be able to access the same information and perform the same functions as are available online to the relevant customer. The Call for Input recognises that many of the outcomes in terms of customer benefits might be achieved through more conventional means and moreover, that the success of Open Finance is dependent on customers being prepared to engage and willing to allow third party providers access to their personal and financial data.
The Call for Input asks whether Open Finance is likely to develop without the FCA’s regulatory intervention. To consider this question the FCA identifies various issues and prerequisites. The consultation paper represents an opportunity for financial services providers to contribute to the development of policy in this area. Feedback is due by 17 March 2020. The FCA plans to publish a feedback statement in the summer.
Find the “Call for Input” here: https://www.fca.org.uk/publication/call-for-input/call-for-input-open-finance.pdf