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FCA feeds back on Open Finance

FCA has published a policy statement following its call for input on Open Finance.

The statement looks at how Open Banking is paving the way for more innovation, and notes the large number of regulatory sandbox participants who are proposing innovative alternatives to traditional credit scoring and affordability models. Open Finance can now build on Open Banking concepts and allow wider access and sharing of data with TPPs, which can lead to creation of better, individually tailored products and widen access to information, support and advice.

FCA has looked closely at the responses to the Call for Input and observations made about the development of Open Banking and will use this information as it develops its proposals. Among immediate actions is a response to consumers saying they find 90 day re-authentication burdensome.  It is also looking at a range of issues identified with APIs and the further development of COP and the CRM.

The statement looks at what would be comprised within open finance, its risks and benefits and some suggested use cases provided by respondents. Almost all respondents considered that TPPs should be authorised, including TPPs themselves. Most respondents agreed the GDPR framework is not likely to be adequate to support a full open finance framework, and most were concerned about data ethics and the potential for disruption and poor results for some customers.

In terms of introducing Open Finance, respondents felt the introduction should be proportionate and phased, and felt it would be quicker to extend open banking to cover non-PSD2 accounts and other banking products than for wider financial products.  They also thought open finance should first introduce “read” access and move onto “write” access once certain criteria have been met.  They felt Open Finance would require an equivalent entity to the OBIE. Finally concerns were raised about digital identity and the need for consumers to have one single digital identity.

FCA had also published its draft principles for Open Finance, which respondents agreed were a good starting point.

FCA will now work on the next steps with BEIS and Treasury, and with CMA in respect of the implementation entity.

Emma Radmore