According to the Financial Times, the UK’s competition regulator has been accused of “putting foxes in charge of the henhouse” after asking the banking industry’s own lobby group to design a supervisory body to combat the dominance of big banks.
In the UK organisations including fintech start-ups, established tech groups like Experian and Equifax, consumer representatives and a cross-party group of MPs have raised concerns over the Competition and Markets Authority’s (CMA) plan to use proposals drawn up by UK Finance as the basis for a consultation on the future of so-called open banking rules.
Open banking forces banks to share valuable customer data with other financial services providers, allowing smaller firms to make faster lending decisions or offer new services such as budgeting tools. It was designed to encourage competition after a CMA investigation in 2016 found that established banks “do not have to compete hard enough for customers’ business.”
The CMA intended for open banking to bring a “revolution” in the UK banking market. The rollout of open banking was managed by a temporary open banking implementation entity. Under UK Finance’s proposals, the nine banks targeted in the CMA investigation would be obliged to fund a “future entity” for three years, but after that they would be able to withdraw membership with six month’s notice.
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