A report released by the Competition and Markets Authority (CMA) outlined the latest findings of Kirstin Baker regarding Open Banking.
Open banking was introduced as a result of the CMA’s Retail Banking Market Investigation, which highlighted a room for improvement in the way banks are delivering service to customers and small businesses.
Following the investigation, in 2017 the CMA gave the order to the UK’s nine largest banks to establish an Open Banking Implementation Entity (OBIE), allowing clients to present their transaction history data to third parties in a safe manner.
Three years later, the CMA received allegations “relating to conduct at the OBIE and Alison White was appointed to undertake an independent investigation”.
What the findings concluded was that the “then Trustee of the OBIE had not ensured that the organisation was properly managed in accordance with the Retail Banking Market Investigation Order 2017”. Even more damning was the statement from White that inappropriate corporate governance had a direct influence on the organisational failings.
Changes occurred, with a new OBIE Trustee being appointed in the face of Charlotte Crosswell, alongside the introduction of a Chief Executive and a Director of People and HR.
Another result of White’s report was that the CMA commissioned Kirstin Baker to lead a review into “the specific lessons for the CMA in its approach to designing, implementing and monitoring remedies in future market investigations”.
Baker, an independent and non-executive Director of the CMA, has concluded that Open Banking is on track to be “successfully implemented”.
However, the CMA did “not fully anticipate the scale and complexity of its remedy and it failed to foresee or manage some of the key risks inherent in the delivery of the project, in particular in relation to governance at the OBIE and relationships with key stakeholders”.
Baker said: “Many stakeholders I spoke to for this review underlined that the CMA should continue to be bold and innovative in using its market powers to benefit consumers.
“However, the Board recognised that there were lessons for the CMA to learn from the governance failings at the OBIE identified by Alison White and my review has found that the CMA did not match the ambition of the remedy with an appropriate level of oversight or strategic risk management.”
Some of the lessons included in Baker’s statement are setting out a stronger CMA governance and an executive oversight, together with building a more effective risk management. All seven recommendations can be seen on the UK Government’s website.
Baker continued: “The Open Banking remedies are some of the most complex ever implemented by the CMA and have been important in opening up competition in retail banking and supporting the growth of UK fintech. The CMA seeks to be a learning organisation and I am pleased that staff at all levels engaged constructively with this review and that changes have already been made or are in progress to address the issues identified.”
David Stewart, CMA Executive Director of Markets and Mergers, reiterated Baker’s words by underpinning that a better monitoring and enforcement of decisions is needed to deliver optimal results.
He said: “Since joining the CMA earlier this year, I have become even more convinced of the potential of market investigations to deliver significant positive impacts for consumers.
“But however good our analysis and proposed remedies are, we will only achieve better outcomes for consumers, businesses, and the economy if we follow through on our decisions with effective implementation, monitoring and enforcement.
“That is why I am so grateful to Kirstin Baker for her review. It will help shape our work programme on remedies and I am determined that we will deliver on it and report on it publicly.”
An update is expected to be published by the CMA next year, highlighting the level of improvements since Baker’s recent report.
