Nine of the UK’s biggest lenders are set to reveal proposals for a not-for-profit company to oversee the evolution of greater competition through open banking, according to an exclusive report by Sky News.
Sky News’ sources suggested that this move would be “an important step” towards making open banking a “permanent feature of the industry landscape”.
This news follows a blueprint and transition plan released by UK Finance, which sets out its plans to comply with a series of requirements imposed by the Competition and Markets Authority (CMA) five years ago.
The Tipton’s mortgage book grows by 7.2%
In the UK Finance blueprint, it explains that the Open Banking Implementation Entity (OBIE), which is led by the Implementation Trustee and required by the CMA order, has been at the centre of the development of open banking in the UK.
The OBIE is a private body, with its governance, composition and budget being determined by the CMA, and is funded by the UK’s nine largest account providers which are referred to as the ‘CMA9′.
The CMA9 consist of AIBG, Bank of Ireland, Barclays, Danske, HSBC, Lloyds Banking Group, Nationwide, RBS and Santander.
The CMA order concluded in its requirements that the “UK’s biggest banks were not competing hard enough for customers’ business” and that open banking “should deliver a new, secure option for customers”.
A source told Sky News that this new proposed company, would “pave the way for the open banking model to be extended to other products”, including for mortgages and insurance.
The annual budget for the not-for-profit company has not been disclosed, nor how it would be split between the CMA9.
UK Finance said in their report that this approach would maintain the capabilities of the OBIE, but the key elements of transition would be to complete governance including appointing a new board and review whether service capabilities are fit for purpose.
The report suggests that this process will run until Q1 2022 under the governance of “the independent chair”.