Moves by the UK regulator the Financial Conduct Authority (FCA) to develop opportunities presented by so-called ‘open finance' have been welcomed.
Open finance builds on the principles of open banking - the sharing of data which provides new ways for customers and businesses to make the most of their money. The FCA said it hopes that open finance would extend those principles to a wider range of products.
By making it easier for consumers and businesses to compare price and product features and switch product or provider, the FCA said that open finance could be beneficial in the general insurance, cash savings and mortgage markets. It could help widen access to advice and support, boost efficiencies for businesses and access to credit, and
spur innovation. The FCA is seeking feedback by March 17, 2020 and will publish a feedback statement in the summer of 2020.
Keith Richards, pictured left, chief executive of the Personal Finance Society, welcomed the moves calling the principle of better engaging consumers in financial planning "a welcome development"
"It is always positive to see the FCA looking at ways to engage consumers with their financial needs," he said. "It is also fair to say, open finance has the potential to increase the chances of vulnerable consumers not only receiving the appropriate cover they need, but also at an affordable price.
"The right values and regulatory regime for open finance needs to be created and presented to organisations and consumers alike. "This will ensure that they can enjoy the benefits of a fair and equal exchange of information."
While lauding the move, Richards also cautioned against the threat of cyber crime.
"The FCA needs to take full account of the data security risks of open access, what and who protects data sources at all points along the chain, and to ensure it is a system with in-built mechanisms to provide help and redress, should things wrong."
The FCA is to launch a discussion on the opportunities and risks arising from open finance, what is needed to ensure it develops in the best interests of consumers, and what role the FCA should play.
Christopher Woolard, executive director of strategy and competition at the FCA, pointed that data and technology are increasingly driving changes in financial markets.
"As a regulator, we need to understand how this change will shape markets and shape regulation in the future," he said. "We want to understand how open finance can develop to best meet consumers' needs and enhance competition in the interests of consumers.
"We also want to understand what role we should play in supporting it."
The FCA has set up an advisory group to help drive forward future strategy. The advice of this group, which comprises industry experts, consumer and business representatives, academics and government departments, has also been published on the regulator's website.