On 23 January 2025, the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) set out the next steps for open banking.
The regulators note that there was significant progress in developing open banking in 2024 as a result of voluntary funding from 20 leading firms. Those developments included:
- Fraud analysis capabilities.
- Consumer protections.
- New open banking services such as variable recurring payments (VRPs), which aim to give consumers greater sight and control over their regular payments.
Variable recurring payments
The regulators note that, as a step towards using open banking payments for e-commerce, VRPs will help consumers to take greater control of their regular payments. It will do this by allowing customers to control how much can be paid at one time or over the course of a month, with the aim of reducing the risk of unexpected expenditure. For businesses, VRPs are intended to offer greater competition to current payment methods and to potentially help reduce processing fees. They might also increase the proportion of customers who complete a payment, through better user experiences.
New independent operator for VRPs
The FCA and PSR explain that, as part of the next steps to deliver VRPs, Open banking Limited will play an important role in establishing an independent central operator to coordinate how VRPs are made. The FCA and PSR (working with industry and trade associations) support it in doing so and note that they look forward to significant progress being made in 2025, which will see live services available for consumers to make VRPs to utility companies, government and financial services firms. The regulators also note that they are working with industry and trade associations to progress development of the commercial arrangements underpinning both VRPs and the use of open banking for e-commerce.
Next steps
The regulators confirm that they will continue to work closely together (overseen by a joint steering committee), and with industry, as they implement the next steps.