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Regulatory updates – open banking (OB) and new payments architecture (NPA)

Regulatory updates – open banking (OB) and new payments architecture (NPA)

 

Background

  • Over many years, the UK has been developing its approaches for financial services initiatives known as open banking (OB) and new payments architecture (NPA).
  • Many UK financial regulators are reviewing and guiding these changes. They include: Bank of England (BOE); Prudential Regulation Authority (PRA); Payment Systems Regulator (PSR); and Competition & Markets Authority (CMA).
  • On 14 May 2020, the CMA published its approved Roadmap for the final stages of Open Banking implementation. The CMA hopes that implementation will be achieved by the end of Q1 2021.
  • The revised timelines have been extended from the previous Q3 2020 timelines because of the current Covid-19 crisis and incorporate flexibility should the current restrictions continue for longer than anticipated.
  • The PSR has launched a consultation from November 2020 to January 2021 to review levels of consumer protections surrounding the Faster Payments Service (FPS), which is part of open banking developments and used for retail payments.
  • The PSR has published for consultation its proposed regulatory approach to ensure that the New Payments Architecture (NPA) infrastructure is resilient while also supporting competition and innovation as it continues to develop.

Impacts

The CMA Roadmap will deliver a seamless Open Banking experience for users and improve the functionality of Open Banking, particularly around payments. The revised timeline should enable the banks to prioritise their Covid-19 responses while still achieving good progress towards completing the final stages of implementation.

Open Banking Ltd was set up by the Competition & Markets Authority (CMA) in September 2016 to fulfil one of the remedies mandated by the CMA following an investigation into UK retail banking (published in August 2016) which concluded that older and larger banks do not compete hard enough for customers’ business.

In December 2017, the Payments Strategy Forum (PSF) published an “NPA and Transition Blueprint’ – a conceptual design for the modernisation and future-proofing of the UK’s retail payments infrastructure.  At the NPA’s heart is a single robust clearing and settlement core, incorporating ISO 20022 messaging standards fields.

Timeline with relevant dates to be logged on regulatory calendar

  • Consultations and actions are open on many topics; reply by 31 January 2021

Next steps

All individuals and firms need to remain aware of infrastructure changes and opportunities while interacting with their regulatory contacts whenever required and supporting the planned consultations.

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