The UK’s Competition and Markets Authority has relinquished control over its open banking unit following a bullying scandal.
The Financial Conduct Authority and Payments Systems Regulator will now oversee the Open Banking Implementation Entity’s transition to a new permanent body and regulate open banking technology in the immediate future.
Open banking allows banks, trusted third parties and technical providers to access consumer financial data (when the consumer consents) to allow more ways for consumers to spend, invest and borrow and allow businesses to provide them with services.
It has been estimated that by September 2023, 60 percent of the UK population will be using open banking payments.
The CMA was tasked with overseeing the open banking unit in 2016 to encourage banks to share customer information to encourage account switching and boost competition.
However, the unit became engulfed in a bullying scandal which led to the resignation of its chairman in October. The independent report found a “toxic culture” of bullying and intimidation at the organisation and claimed the CMA did little to act on problems when they became apparent.
Related: Antitrust Chronicle – Open Banking
The new regulatory committee will work with OBIE, but the unit’s future remains uncertain as the watchdogs and the Treasury consider creating a new entity. The CMA ordered nine UK banks and building societies to set up the OBIE in 2017, to encourage big banks to share customer information with startups and fintechs, and address a lack of competition in the financial sector.
The CMA said “Recommendations will be taken into consideration in the design of a future entity to succeed the Open Banking Implementation Entity. The future entity would build on the significant progress made to date by the OBIE to encourage innovation and support competition in retail banking.”
Open Banking is an initiative launched by the CMA in 2017 following its Retail Banking Market Investigation. It allows consumers and SMEs to share their bank account information securely with trusted intermediaries who can then use this information to help them save time and money by finding better products to suit their needs.
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