Lords propose amendments to key UK Open Banking legislation
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The Data Use and Access Bill, one of the government’s key pieces of legislation around finance, has reached the Committee Stage in the House of Lords.

The Bill, which has particular significance for Open Banking, has passed both its first and second readings and can now be scrutinised by any member of the House of Lords, either in the open chamber itself or separately. The first Committee session was held yesterday, with several amendments proposed.

Some opposition Lords, notably Viscount Camrose and Lord Markham – both members of the Shadow Cabinet as Shadow Ministers for Science, Innovation and Technology – raised concerns around terminology and definitions, a common criticism of government bills.

Amendments have been proposed in areas which could prove significant to the Bill’s final format as and when it becomes an Act. For example, a provision requiring that third-party recipients of customer data should publish regular statements on their cyber resilience has been proposed.

Many of the proposed amendments have met some pushback from the government, represented by Baroness Jones of Whitchurch, Parliamentary Under-Secretary of State, Department for Science, Information and Technology.

Notably, an amendment proposed by a Liberal Democrat peer to require the Financial Conduct Authority (FCA) to specify requirements on the duration of data access, to set a default validity period on new data access of 24 hours, and a maximum validity period of more than seven days, was criticised by the Baroness of potentially holding back Open Banking innovation.

“Many SMEs provide ongoing access to their bank accounts in order to receive efficient cloud accounting services,” Baroness Jones responded to Lord Clement-Jones’ proposal.

“If they had to re-register frequently, that would undermine the basis and operability of some of those services. It could inhibit the adoption and viability of open banking, which would defeat one of the main purposes of the Bill.”

This response is unsurprising given the Labour government’s enthusiasm for Open Banking, something it shared with its Conservative predecessor. The UK government, under the leadership of both parties, is keen to see Open Banking make a greater contribution to the UK financial services sector and wider economy.

Labour made manifesto pledges around Open Banking and since its July election victory, it has been moving to support development through legislation. The Data Bill, introduced in October, is part of this, alongside the Smart Data Bill introduced shortly after the party’s election victory.

The Data (Use and Access Bill) has significance beyond Open Banking though. Its policy of creating smart data schemes could also underpin how AI is used in the UK economy, another area of interest and manifesto pledge from Labour.

Amidst the government’s wider ambitions for innovation and growth for UK financial services, some stakeholders in the sector have welcomed its legislative efforts.

Thomas Hill, Principal Consultant at Capco, a financial services-focused management and technology consultancy, says that the Bill’s provisions “are expected to bolster consumer trust, improve compliance standards, and support technological innovation – with direct implications for the UK financial services sector.

He remarks: “While it will involve additional implementation, governance and compliance costs, the Bill also presents substantial opportunities for financial services firms with the bills focus on ensuring AI is deployed responsibly, data security is prioritised, and digital processes are inclusive and transparent, likely to see firms gain greater trust from consumers.

“Additionally, the Bill promises operational gains, likely to drive streamlining of customer onboarding, reducing time spent on manual verifications, and enhancing customer data quality.

“At an industry level, this Bill will be crucial in positioning the UK at the forefront of secure and innovative financial services, paving the way for responsible technological advancement while creating a regulatory environment that prioritises safety and protects individual rights.”

The amendments proposed to the Bill this week have yet to be approved, with three more sittings scheduled for 10 December, 16 December and 18 December.