JROC proposes design of Future Entity in the UK

Ellie Duncan
22 Apr 2024

The UK’s Joint Regulatory Oversight Committee (JROC) has published its proposals for the design of the Future Entity that will replace Open Banking Limited (OBL), including a potential funding model, and has recommended that an ‘Interim Entity’ is created as a subsidiary of OBL to oversee non-Order work in the meantime.

JROC anticipates that the Interim Entity will be needed for “at least 18 months”, from August 2024 to December 2025, until January 2026, when the long-term regulatory framework for UK Open Banking is expected to be in place.

At which point, the new Future Entity will take effect, as will the new funding arrangements.

In its report, JROC said that the centralised entity “will be at the heart of the Open Banking ecosystem, it will continue to set the standards for Open Banking and ensure that the foundations laid under the CMA Order are retained and progressed”.

The new entity “may also have the ability to expand to support other industries and to help to deliver progress against related Smart Data initiatives”, the report states.

JROC is proposing that, initially, the Interim Entity will progress the parts of the non-Order JROC workstreams currently being carried out by OBL, on the basis that “these workstreams are for the benefit of the entire ecosystem, not just the CMA9”.

Regarding how the Future Entity will be funded, JROC’s preliminary recommendation is that a funding model is established which “shares the fixed costs of the Future Entity equitably across ASPSPs and TPPs using a tiered model” and that “shares the costs of developing, delivering and operating premium APIs across the firms who wish to develop and/or offer the specific premium API, using a ‘per use’ or flat fee model”.

The board of the Future Entity will have the final decision on the funding model.

Before then, the “transition” funding model will move towards a broader arrangement, with ASPSPs, TPPs and AISPs being asked to fund the Interim Entity.

JROC is seeking views from across the ecosystem on its proposals, which are based on the work carried out by the Future Entity Working Group (FEWG).

While JROC has adopted most of the recommendations made by FEWG, one area on which the groups diverged is promotional activity.

FEWG recommended that the Future Entity should not “undertake Open Banking promotional services, aside from basic provision of public information”.

However, JROC said it believes that in order for Open Banking propositions to deliver benefits to consumers and businesses “it is appropriate that these would need be promoted and that the Future Entity is in the best position to set out how Open Banking works and how consumers and end users can be assured of its benefits”.

Marion King

Marion King, chair of Open Banking Limited

Marion King, chair of Open Banking Limited, welcomed the publication of JROC’s call for views on the design of the Future Entity for Open Banking.

“JROC’s report provides much-needed clarity on the design of the Interim Entity, Future Entity, and long-term regulatory framework for Open Banking,” King said.

“Open Banking has been, and continues to be, a UK success story with impressive month-on-month growth in users and payments. Its adoption in the UK has already added more than £4 billion to the economy, attracting inward investment and creating almost 5,000 highly skilled jobs.”

Last week, the UK government published a Smart Data Roadmap, setting out its plans to explore the use of Smart Data powers in the Data Protection and Digital Information (DPDI) Bill.

King added: “JROC’s report, along with the recently published government Smart Data Roadmap, provides much-needed certainty to the market and will allow for continued investment in our world-leading and customer-centric ecosystem, as it moves us forward on the journey to deliver the next phase of Open Banking in the UK.”