The CMA’s guidance on future oversight of Open Banking have been widely welcomed by the payment space – with Tink’s Jan van Vonno underlining that the importance for the ecosystem to understand the next steps.

During its guidance, the body emphasised a new Joint Regulatory Oversight Committee to agree and implement the next steps led jointly by the FCA and PSR.

The Research Director at Tink, van Vonno commented on the moves taken by the CMA: “At Tink we’re pleased with the consultation response by the UK’s competition and Market Authority (CMA) and the Treasury’s announcement. It is important for the entire ecosystem to understand what the next steps are for the open banking regime.

“The UK is the only country in Europe where the competition authority is directly overseeing the development of open banking. The currently bank-funded Open Banking Implementation Entity (OBIE) stands between banks, third-party providers (TPPs) and the regulators. Although the work of the OBIE has allowed for the creation of granular APIs and a thriving ecosystem, we believe there’s still much that can be done to unlock the value that open banking can bring — especially in payments.

“Now that the CMA Order 2017 is finally nearing its completion (with the implementation of sweeping being the last item on the roadmap), the role for the OBIE is also coming to an end under its current mandate. We believe it is up to the ecosystem (financial institutions, third-party providers, beneficiaries and consumer organisations) to come together and define a new direction for the OBIE.”

Speaking on the steps that need to be taken and the pivotal nature of a smooth transition, van Vonno added: “The announcement of the JROC will help ensure a smooth transition towards a Day 2 scenario where the ‘Future Entity’ can leverage the existing infrastructure to expand the current capabilities into the realm of open finance.

“While the CMA will continue to monitor the reporting of management information by the banks, it is now up to the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) to step forward and oversee the Payment Services Regulations 2017 (PSRs 2017) while supporting the development of open finance.”

Meanwhile, Damien Cahill, Co-founder and COO, Vyne, highlighted his belief that it represents a ‘critical evolution’ for further standardisation of Open Banking the UK. 

He stated: “As we are moving closer to the age of open finance, a favourable regulatory landscape is crucial for open banking to thrive. A time when 5 million consumers and businesses are already taking advantage of Open Banking services, this announcement is well-timed. Coordination between the Competition and Markets Authority (CMA) and the Open Banking Implementation Entity (OBIE) is critical for the evolution and further standardisation of Open Banking within the UK. 

“It will empower users, giving them more control over their data and providing a market rich with competition and innovation to better meet their banking and payments needs. With the cost of living crisis rearing its head, it has never been more important to reduce friction and promote financial inclusion.”

Nonetheless, Maria Palmieri, Head of Public Policy at Yapily, highlighted her belief that the steps don’t go far enough. 

She said: “Whilst it is encouraging to see further clarity from the CMA on the roll out of a Joint Regulatory Oversight Committee, many questions still remain around the future of Open Banking in the UK. With the current mesh of regulators, it is almost impossible for fintechs, banks and open banking providers to plan for the future. 

“This technology holds the power to transform the financial livelihoods of people and businesses. But to make that happen, we need to see the creation of a formal Open Finance Framework and further guidance on the future role of the Open Banking Implementation Entity, particularly on monitoring and enforcement. These steps would turbocharge further adoption of open banking solutions, ensuring better and fairer financial services for everyone.” 

Expert Analysis: Whilst the guidance of the CMA won’t have been exactly what everyone in the sector has desired – what is vital at this stage is that the industry takes steps to implement the new framework for the growth of Open Banking as it continues to grow in prevalence amongst UK consumers.