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Recommendations for The Next Phase of Open Banking in the UK

In April 2023 the Financial Conduct Authority (FCA) and the Payment Services Regulator (PSR) published their joint ‘Recommendations for the next phase of Open Banking in the UK’ document, outlining their intend roadmap and the stages to achieving the establishment of the future open banking entity (the ‘future entity’).

Their aim is to develop an ecosystem that is resilient, economically sustainable, efficient, and scalable and to promote new and innovative products and services, provide a greater choice of payment methods and support further data-sharing propositions.


Although the paper acknowledges that the UK is currently a leader in open banking, it also highlights the fact that more needs to be done.

The regulators have outlined three main priorities to achieve the full potential of open banking:

  • Ecosystem, establishing a sustainable and competitive footing for the ongoing development of the open banking ecosystem so that it can grow beyond the current functionalities and bring further benefits to end users.
  • Payments, unlocking the potential for open banking payments.
  • Data sharing, adopting a model that is scalable for future data sharing propositions.


Alongside these three priorities, there are five themes that need progressing in the next two years to allow open banking and the future entity to develop and establish.

  • Levelling up availability and performance, ensuring open banking application programming interface (API) availability and performance is consistently high in the ecosystem. The regulators aim to collect regular data on API availability and performance from all ecosystem participants and are asking all participants to assist in the development of a data collection and reporting template for all account servicing payment service providers (ASPSPs) and third-party providers (TPPs). Ecosystems need to submit their proposal by Q2 2023.
  • Mitigating the risks of financial crime. The regulators recognise the need for improved data around the level of financial crime in open banking, including fraud and money laundering. The Open Banking Implementation Entity (OBIE), supported by will oversee the design of a financial crime data collection and reporting template for open banking. The template should be submitted to the FCA and PSR for review and comment by the end of Q2 2023.
  • Ensuring effective consumer protection if something goes wrong. OBIE, and thereafter the future entity, will be required to perform a gap analysis of dispute processes for open banking, including both payments and data requirements, and report back by the end of 2023.
  • Improving information flows to TPPs and end users. The FCA will assess and consult on whether existing requirements in relation to error codes need any changes to help firms and the ecosystem. The consultation will be published by the end of Q2 2024 with the support of the PSR.
  • Promoting additional services, using non-sweeping variable recurring payments (VRP) as a pilot. The support for the development of new products and services is key for the regulators and a number of areas are highlighted in the report including the drafting of a framework for rolling out non-sweeping VRPs; establishing a multilateral agreement or rulebook as a mechanism for coordinating delivery and ongoing service provision across ASPSPs and TPPs or encouraging firms to test new products and authentication methods.




The FCA and PSR will measure success by:

  • looking at the growth of the ecosystem, assessing the number of products and services offered, the increased use and reliance on open banking by consumers and businesses, the significant increase of total number of customers, and the overall growing investment in open banking;
  • assessing the number of incidents and issues, the way in which those are resolved, and the scale of any resulting customer loss; and
  • assessing innovation, whether prices and costs are low, and whether the quality of services improves as a result of competitive pressure being exerted across the sector.


Firms must ensure they take this opportunity to contribute and get involved in the development of the future entity:

  • Ensure they submit their proposal for a data collection and reporting template by the end of Q2 2023.
  • Ensure their financial crime compliance and consumer protection frameworks are strong and they are capturing relevant data to evidence their work in both areas.
  • Sign up and attend the FCA’s May Webinar to discuss the recommendations outlined in the paper.
  • For a more in depth understanding firms can read the Joint Recommendations paper here


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