Last week saw further developments in the move towards Open Finance as the the Joint Regulatory Oversight Committee (JROC), co-chaired by the FCA and the Payment Systems Regulator (PSR), published its recommendations for the next phase of open banking in the UK.  

Open banking is a secure way for consumers and businesses to give regulated third-party providers (TPPs) access to their payment account data and to initiate payments. The government recognises that while existing baseline of regulatory-led free access to payment account data, has been and remains pivotal to democratising access to data as well as to supporting innovation and competition, a new phase is needed to allow the ecosystem to scale. It also recognises the importance and potential of further data sharing and collection. Open Finance initiatives could see open banking-style access to payment account data extend to other institutions and data sets such as, for example, pensions or investment account data.

The FCA published its feedback on the Call for Input for Open Finance in March of last year and the JROC is working closely with the government to design the long-term regulatory framework for open banking so that it will be scalable to support potential future data sharing schemes. 

Doing this, JROC is supporting government in their proposals for smart data legislation. The government intends to create a smart data scheme under the Data Protection and Digital Identity (DPDI) Bill, currently progressing through Parliament and introduced on 8 March. The smart data powers constitute part 3 of the DPDI Bill and the government intends to use these powers to create a regulatory framework for data sharing in open banking and empower the FCA to oversee data sharing requirements applying to firms who hold or receive data or offer services within the scope of a smart data scheme for open banking.