UK fintechs criticise CMA over open banking ‘uncertainty’

An open letter calls on the Competition and Markets Authority (CMA) to define variable recurring payments, an alternative to Direct Debit or a continuous payment authority

More than 20 fintech companies have criticised the UK’s competition regulator over a lack of clarity in defining and implementing an open banking mechanism for recurring payments.

An open letter – signed by companies including Volt, GoCardless and Plum – calls on the Competition and Markets Authority (CMA) to define variable recurring payments, an alternative to Direct Debit or a continuous payment authority.

Variable recurring payments (VRP) are a form of payment instruction that allows customers to connect payments service providers to their bank accounts, which lets providers make a series of payments on their behalf.

The letter, sent on Monday, expresses concerns from the sector over delays from the CMA in the definition and implementation timeline of variable recurring payments.

The companies, along with industry body Innovate Finance, explained that without clear communication for the implementation deadlines, fintechs are at risk of losing clients by not allowing them to benefit from VRP.

The letter also expressed concern at the delay in the publication of the CMA’s plans for the future of the open banking implementation entity (OBIE).

OBIE was established in 2017 by the CMA, following a report from the department on the UK’s banking market. The report recommended the implementation of open banking, which has helped newer banks and fintechs to compete in the market.

The letter described a ‘lack of clear direction’ which means that ‘uncertainty will prevail’. This, the letter added, could lead to the UK being at risk of losing its position as a world leader in open banking.

The letter concluded with a ‘call for progress on these two issues to be urgently expedited’ to give ‘certainty on the future direction of open banking’.