The UK roll-out of open banking was given a boost today, after the competition regulator clarified its definition of sweeping for variable recurring payments (VRP).
VRPs allow customers to connect authorised payments providers to their bank account so that they can make payments on the customer’s behalf. ‘Sweeping’ is the automatic transfer of money between a customer’s own accounts.
The Competition and Markets Authority (CMA) has now set out what does and does not fall under its definition, meaning the Open Banking Implementation Entity (OBIE) can progress its plans to test sweeping.
“The CMA believes that the update published today provides the clarity necessary for the OBIE to take views on the specific use cases that fall within the scope of the order where the position was previously unclear,” a spokesperson from the CMA said.
The OBIE welcomed the clarification and said that it now progress plans with banks and third party providers to test sweeping using VRPs in a managed roll-out.
The announcement will be a relief to the fintech sector, which recently wrote to the CMA expressing its concerns about delays to decisions relating to open banking. 26 UK fintechs, including Zopa and Plend, warned that a lack of clear direction on open banking would put the UK at risk of falling behind with the data sharing initiative.
“We welcome the clarity provided by the CMA today and look forward to the new sweeping propositions coming to market later this year,” said Charlotte Crosswell chair and trustee of the OBIE.
“Delivering better outcomes continues to be a key focus of our innovative ecosystem and sweeping is a great example of how consumers and small- and medium-sized enterprises can make their money work harder with better interest rates and overdraft alternatives.”
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However, some industry onlookers were unhappy with the CMA’s announcement.
Adam Jackson, director of policy at Innovate Finance and Charlie Mercer, head of economic policy at Coadec, were disappointed with the CMA’s new definition of VRP for sweeping, describing it as “narrower” than it could be.
“As a result, it will not lead to fintechs creating as many innovative products and services for consumers that can help with managing the cost of living and improving their long-term savings and pensions,” they said.
“In the meantime the future of the OBIE remains uncertain and our concern at the delays to clarifying its role in the future of the UK’s open finance regime remain.”