For a reminder of the JROC’s recommendations and two-year roadmap, take a look at our Engage article ‘Open Banking: JROC recommendations on next phase aim to keep UK ahead of the pack’.

The JROC is now moving to set up dedicated workstreams to action the key themes and priorities outlined in the recommendations. This includes:

• launching two new working groups on VRPs and the Future Open Banking Entity; and
• tasking Open Banking Limited (OBL) (ie the current Open Banking Implementation Entity) to lead and coordinate workstreams on four of the other key themes.

VRPs working group: Helping to unlock the potential for Open Banking payments

Unlocking the potential for Open Banking payments (eg in supporting retail transactions as an alternative to card payments) is one of the three priorities to deliver a new phase for Open Banking that were identified by the JROC in its April 2023 recommendations report. To that end, promoting additional services - using non-sweeping VRPs as a pilot - is also one of the five key themes from the report.

As the JROC’s latest press release explains, currently VRP use is limited to when individuals want to move money between their accounts (referred to as ‘sweeping’). Expanding the use of VRPs will allow consumers and businesses to make a wider range of payments (eg utility bills or charitable donations) more conveniently and efficiently.

As set out in its Terms of Reference, the aim is to develop a multilateral agreement for non-sweeping VRPs that will be used as a pilot for future multilateral agreements. The new working group (chaired by the Payment Systems Regulator (PSR)) will develop a blueprint for a phased roll-out of non-sweeping VRP in a report by the end of September 2023, with a first draft of the report to be submitted to the PSR in August. The blueprint will include:

• the scope of the work and identification of ‘low risk’ use cases;
• a set of functional requirements to support the intended scope with next steps, owners and timelines;
• specific recommendations for the customer protection requirements for “low risk” VRP with next steps, owners and timelines;
• specific recommendations for the implementation of a commercial model with next steps, owners and timelines and consideration of whether the commercial model would apply to use cases beyond VRP; and
• a view on whether regulatory intervention is likely to be required in order for the outlined next steps and timelines to be met by the identified owners.

The JROC expects this to enable the phased roll-out to start before the end of this year.

Future Open Banking Entity working group: Key requirement to establish an economically sustainable and effectively governed successor body

The working group on the Future Open Banking Entity will be chaired by the FCA. Its Terms of Reference state that it will analyse and help develop the options and design for the Future Entity, including recommendations in relation to its role, structure, funding and governance. The working group will also consider and propose operational arrangements for the successful implementation of the entity. The working group will report to the JROC by the end of September 2023, with a first draft of the report to be submitted to the FCA and the PSR in early September. The JROC will publish its views in its planned progress update in Q4 2023.

As time is of the essence, both this and the VRPs working group will be established by the end of June 2023.

OBL workstreams on other key themes

In a letter to OBL, the JROC reminds OBL that it has been asked to lead and coordinate on the following four key themes, overseen by the JROC: 

• Levelling up availability and performance;
• Mitigating the risks of financial crime;
• Developing proposals for dispute processes; and  
• Improving information flows to third party providers (TPPs) and end users.

The JROC sets out specific activities to progress against these themes, which include working with Pay.UK, as the operator of Faster Payments, where necessary. The letter includes a full timetable of delivery, and OBL is asked to provide a monthly update on its work to the JROC members at the JROC meetings. The JROC also asks OBL to nominate a representative to be a member of each of the two new working groups on VRPs and the Future Open Banking Entity.

Next steps

Both the VRPs and Future Open Banking working groups must submit their final reports to the JROC by the end of September 2023. OBL is subject to various delivery timelines as set out in the JROC letter. The JROC will publish a progress update on its Open Banking roadmap in Q4 2023.

If you would like to discuss any aspect of the JROC’s recommendations, roadmap or work programme, please get in touch with one of the listed lawyers or your usual Hogan Lovells contact.

Authored by Virginia Montgomery.