On 19 April 2024, the Joint Regulatory Oversight Committee (JROC) published its proposals for the design of the future entity for UK open banking.

In April 2023, JROC set its vision and recommendations for the future of open banking. Since then, it has been working with the industry, to make progress on the key steps on this journey. In this document, JROC sets out recommendations for the structure of a Future Entity that will play a key role in the further development of the Open Banking ecosystem and the promotion of competition and innovation. It also sets out recommendations on funding arrangements for this Future Entity, noting that final decisions will be for the board of the future entity. JROC also asks industry for their views on some of these recommendations. 

JROC also proposes the creation of an ‘Interim Entity’, which will be a subsidiary of OBL and exist in an interim regulatory phase, before the full transition to the Future Entity occurs. Initially, the Interim Entity will progress the parts of the following JROC workstreams currently being carried out by OBL before they are passed on to the Future Entity: 

• Workstream 1 Levelling up availability and performance; 
• Workstream 2 Mitigating the risks of financial crime;
• Workstream 3 Ensuring effective consumer protection if something goes wrong;
• Workstream 4 Improving information flows to TPPs and end users; and
• Workstream 5 Promoting additional services, encouraging innovative use cases (using non-sweeping variable recurring payments (VRP) as a pilot).

The consultation on the recommendations closes on 20 May 2024, following which JROC intends to publish a summary of the feedback, together with its response. Contingent on establishing a long-term regulatory framework for Open Banking, JROC is recommending the transition of all workstreams from the Interim Entity and OBL to a 'Future Entity' over the next two years.

So what? 

These recommendations are designed to place the provision of open banking services on a solid footing going forward. They will also aid the transition to the long term regulatory framework for Open Banking, so that it will be readily scalable to support potential future data-sharing schemes, such as open finance initiatives. At this stage the regulators are looking at the structure, governance and purpose of the new entities, the funding options for the new entities and the respective roles of the new bodies. JROC considers this publication to be a significant milestone in the UK’s open banking journey. It is therefore crucial at this stage for the industry and stakeholders to engage with the regulators in finalising the relevant policies and building the pathway to the new governance framework for Open Banking.