A group of UK based FinTech companies have written an open letter to the Financial Conduct Authority (FCA) calling for greater clarity on how open banking will be regulated from 2023 onwards.
The letter criticizes the Joint Regulatory Oversight Committee (JROC), a regulatory body established in March by the Competition and Markets Authority (CMA). The FinTech signatories have claimed that the JROC has been unclear and vague about their directions and guidelines towards open banking.
Open banking allows banks and third-party financial service providers, such as budgeting apps and cash flow management tools for businesses, secure access to banking and other financial data. In the UK . open banking is regulated by the FCA and only companies that are authorised by the FCA can use open banking APIs to access financial information or initiate payments on behalf of a customer.
However, according to the open letter, the JROC has failed to give clarity on the direction that open banking will take, and has asked the regulatory body to step in. Organised by the Coalition for a Digital Economy (Coadec), a tech industry advocacy group, the letter was signed by companies including Monzo, Wise, Plum, and Moneyhub.
The UK FinTech sector has over 1600 firms and remains a key destination for venture capital in Europe. In 2020, the sector attracted nearly £3b in investments.
“We call for the JROC to publish clear directions and timelines for the continued enforcement of Open Banking in 2023 and beyond as a matter of urgency,” a key section of the letter states.
Commenting on the role of open banking, CMA chair Jonathan Scott was quoted saying, “Open Banking is a pioneering intervention that is helping millions of people and small businesses save money and time. The UK is recognised as an international leader in this space.”