The FCA has unveiled its blueprint for the Future Entity, a new standards body set to define the next phase of UK open banking. But questions over funding, consumer engagement and the scope of its role risk slowing the pace of progress.
The Financial Conduct Authority (FCA) has set out its vision for the Future Entity that will take over and expand the role of Open Banking Limited (OBL), creating a new standards body to underpin interoperability across the UK’s open banking ecosystem.
While the regulator has presented the plan as the “next step in realising our vision of a more innovative, safe and competitive payments sector”, the detail also reveals unresolved questions that could determine whether this next phase delivers on its promise.
The FCA’s feedback statement (FS25/4) follows the conclusion of the Joint Regulatory Oversight Committee (JROC) and outlines how the Future Entity will act as the primary standard setter for open banking application programming interfaces (APIs).
The regulator said it will “monitor both API performance and adherence to relevant standards” and provide directory and certification services, while ensuring “a minimum level of service and consistency across open banking services”.
It is being designed as a not-for-profit company limited by guarantee with an independent board appointed by an appointments committee that includes consumer, business, third-party provider (TPP) and account servicing payment service provider (ASPSP) representation.
Advisory groups will feed into the board, including panels for SMEs and consumers.
The Future Entity will sit alongside two other layers in the FCA’s proposed model. Payments infrastructure will continue to provide the rails for transactions, overseen by the PSR and Bank of England, while a commercial scheme layer will see competitive industry-led schemes operating above the core standards.
The first of these, an industry-owned commercial variable recurring payments (cVRP) scheme, is due to launch in autumn 2025.
Notable changes from earlier plans
One of the most significant changes is the decision to scrap the planned Interim Entity.
“We no longer believe it necessary or efficient to create an Interim Entity” in order to move quickly towards establishing the Future Entity, the FCA said. This reversal prioritises speed but removes a transitional governance stage that some stakeholders considered important for stability.
The FCA has also left the door open for the Future Entity to take on operational roles. While it does not expect the body to “own or operate commercial schemes for open banking where there are incentives for market innovation”, it may do so “where there are not commercial incentives, or there are other market failures”.
This could blur the boundary between neutral standard-setting and market participation.
On consumer engagement, the FCA has been clear that awareness building will fall to industry.
It stated: “The FCA does not typically promote the services of a given financial sector. Industry participants are well positioned to raise public awareness of open banking services and the options available to consumers.”
Funding questions remain
The Future Entity will be funded on what the FCA calls an equitable basis, using a hybrid model combining fixed fees for core services and charges for premium services.
While respondents broadly agreed with this approach, they raised concerns that certain models could unfairly penalise high-volume, low-margin firms or deter large organisations from entering the market. There was also a risk of ‘free riding’ on the development of premium APIs if non-contributors could access them without paying for set-up costs.
The FCA has yet to define the precise funding metrics. It has commissioned professional services to conduct financial modelling and will use a series of industry workshops this year to refine the approach.
Open finance still on the horizon
Although open finance is described as a “key part” of the FCA’s five-year strategy, it remains largely out of scope for the current plan. The Future Entity may take on a role in open finance in future, but for now the regulator has committed only to publishing a roadmap by March 2026.
The FCA noted that open finance “has not had the same level of in-depth consideration” as open banking and said the Future Entity’s immediate focus will be on establishing consistent standards for payment account access.
Implications for stakeholders
For banks and ASPSPs, the proposals signal the likelihood of new compliance requirements, greater standardisation and potential cost-sharing obligations.
For TPPs and fintechs, the emphasis on interoperability and minimum service levels offers stability, but the uncertainty over cost allocation may create budgeting challenges. Merchants receive little direct mention in the FCA’s plan despite their potential role in driving adoption.
From a consumer perspective, the FCA’s focus on redress and dispute resolution in commercial schemes is welcome. However, leaving public awareness entirely to industry could limit uptake if messaging is inconsistent or poorly coordinated.
What’s next?
The FCA will hold workshops with industry over the summer and autumn before confirming how the Future Entity will be established by the end of 2025. Secondary legislation from the Treasury will be required to give the regulator its full powers under the Data (Use and Access) Act.
“We expect the Future Entity to play a central role in the next phase of open banking, setting and monitoring the standards that underpin the industry. However, we cannot realise this future alone,” said Matthew Long, Director of Payments and Digital Finance at the FCA.
