JROC publishes roadmap for next phase of Open Banking

The Payment Systems Regulator (PSR) and its fellow members of the Joint Regulatory Oversight Committee (JROC) published a roadmap in April 2023 for delivering the next phase of open banking, the PSR's head of policy Kate Fitzgerald said in a speech on 19 October 2023¹. The roadmap sets out three phases of delivery, with a full set of open banking payments, including the retail use case, targeted for 2025¹.

Fitzgerald, Head of Policy at the PSR, described the PSR as "the UK's independent economic regulator of the payment systems that underpin our economy", covering the LINK cash machine network, Faster Payments, Visa, Mastercard, Bacs and the forthcoming Sterling Fnality system¹. She said over seven million consumers and businesses are using open banking enabled products and services to manage their money and make payments¹.

The three phases run as follows¹:

Fitzgerald said a JROC working group she chaired, described as an industry led undertaking, had focused first on lower risk VRP use cases: payments to utilities and financial services, where existing regulation ensures fair play, and payments to central and local government¹. She said the PSR published a paper in 2023 setting out principles for commercial models it considers sustainable, safe and scalable, namely that fees and charges broadly reflect relevant long run costs, incentivise investment and innovation, incentivise take-up of open banking by consumers and businesses and use of network effects, and are transparent¹.

On enforcement, Fitzgerald said that if agreement on the central components of a commercial model is not happening at the pace needed and is not aligned with the outcomes the PSR is trying to drive, then the PSR will need to consider what intervention is required¹. She said the PSR had asked working groups to highlight where regulatory intervention might be required, would consider those views by the end of the year and would act where it thinks it is needed¹.

Why it matters for households

Open banking lets consumers and businesses share their bank account data with other apps and services, and make payments directly from their account¹. The roadmap dates matter because they set out when particular payment types are expected to become available: lower risk VRP use cases in the year after the speech, and a full set of open banking payments, including the retail use case, in 2025¹. Until then, the use cases being taken forward first are payments to utilities, financial services and central and local government, chosen because existing regulation already provides protections if something goes wrong in the payment journey¹.

Fitzgerald said the working group produced recommendations on how consumers can understand and control VRPs, and that clear dispute processes and escalation routes are needed if something goes wrong¹. She also said work is under way by Pay.UK, Open Banking Limited (OBL) and UK Finance on an enhanced fraud data system, and that the PSR expects Pay.UK to play a strong role in co-ordinating participants and developing protection and conduct rules for open banking initiated payments¹. She said ongoing commitment is needed for the funding of OBL until a transition to a different model¹.

What happens next

The PSR said it would consider the working groups' views on where regulatory intervention might be required by the end of the year and act where it thinks it is needed¹. Fitzgerald also said the PSR will continue to engage with industry on the next stages of development¹. No further dated milestones beyond the phases set out in the speech were reported¹.

The PSR's remit and its work on payments and fraud refunds are set out in its role as the payments regulator, and open banking originated as a remedy from the CMA retail banking market investigation.