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The FCA has recently published a feedback statement summarising the responses received on April 2024 proposals about the design of the Future Entity for UK open banking. The feedback statement sets out the FCA's expectations for the role of the Future Entity, how it will sit within the open banking ecosystem, and next steps. However, the FCA highlights that policy thinking in this area is still a work in progress and that the proposals in the feedback statement are subject to future legislation. This article summarises some key points from the feedback statement, including other recent (and planned) related regulatory and legislative developments.
In its feedback statement, the FCA seems keen to emphasise the importance of striking the right balance between facilitating competition in open banking services and ensuring consistency and interoperability of those services through central implementation and oversight of core standards. It makes it clear that it doesn’t expect the Future Entity to own or operate commercial schemes for open banking where there are incentives for market innovation. Likewise, while it expects the Future Entity to provide directory and certification services, it states that this shouldn’t prevent a market developing for such services.
It's likely that early adopters of commercial open banking schemes in the UK stand to benefit from first mover advantage, gaining the opportunity to shape industry standards, customer expectations, and technological frameworks. These firms can build brand recognition and secure strategic partnerships ahead of competitors. However, they also face the risk of bearing higher initial costs, navigating regulatory uncertainties, and potentially operating at lower margins as they invest in infrastructure and market education. Later entrants may benefit from free-rider effects, learning from the missteps of early movers and entering with more efficient models, potentially achieving greater profitability with reduced risk.
With the above in mind, points for firms to start to consider include:
Hogan Lovells offers the combination of legal professionals and regulatory consultants who work together to provide a 360 degree view of the issues. If you would like to talk through how we can help you prepare for the changes, please reach out to any of the people listed in this article or your usual Hogan Lovells contact.
Following the Joint Regulatory Oversight Committee’s (JROC) winding down, the FCA is now spearheading work on the establishment of a Future Entity responsible for open banking in the UK. According to the FCA, there is increasing public engagement with open banking, with 13.3 million active users in March 2025, rising 40% on 2024.
This feedback statement ties into the National Payments Vision (NPV), which named the FCA as the lead regulator to progress open banking, and the government’s July 2025 Mansion House speech and Financial Services Strategy which announced ambitions for and initiatives relating to growth and greater competitiveness in financial services (see our previous article here).
The new publication responds to feedback to the April 2024 consultation on JROC’s proposals for the design of the Future Entity and sets out the FCA’s expectations for the new organisation’s role.
The FCA has confirmed that it no longer intends to establish an interim entity.
In addition to the consultation and feedback statement, other key milestones in progressing open banking have also recently been achieved:
In addition to the above – and reflecting the priorities of the NPV – progress has been made on an industry-led initiative to establish a new industry-owned body that will own and operate a commercial scheme designed to enable the rollout of Variable Recurring Payments (cVRP). The initiative looks to unlock a series of open banking use cases (eg utility bill and tax payments) with a sustainable commercial model for industry participants and appropriate dispute processes. Read more on this other strand of open banking developments under ‘Commercial open banking schemes’ below.
The FCA sets out three core systems that will interact to enable open banking payments:
The feedback statement confirms that the Future Entity will be the primary standard setting body for open banking application programming interfaces (APIs) in the UK. The FCA aims for these standards to ensure consistent user experiences and interoperability across use cases.
Significantly, the Future Entity will:
The Future Entity will be a new not-for-profit company limited by guarantee. It will not be a public body or have enforcement powers, subject to legislation.
The Future Entity will collect revenue to recover costs and invest on an equitable basis from its users and beneficiaries.
The FCA does not anticipate that the Future Entity will own or operate commercial schemes for open banking where there are incentives for market innovation (see further below under ‘Commercial open banking schemes’). But where there are no commercial incentives, or there are other market failures, the Future Entity may run those schemes.
The FCA expects the Future Entity and operators at the commercial scheme layer to be regulated as interface bodies under the DUAA, which refers to such a body as one which carries out one or more of the tasks set out under s.7(1) of the Act - including setting standards or making other arrangements relating to the use of an interface.
The FCA will have to tread carefully in balancing the need to prevent any costs from acting as a barrier to entry for smaller firms. Meanwhile, it must also ensure that larger organisations are not disincentivised from engaging in the framework due to a disproportionate financial burden. The FCA has commissioned professional services to create financial modelling for the Future Entity and consider how the costs could be shared between participants.
The Future Entity, as the primary standard setter for open banking, is expected to take forward coordination and standards-setting for non-Retail Banking Market Investigation Order 2017 (non-CMA Order) open banking activities, as well as Order related activities (subject to the Competition and Markets Authority’s (CMA) consent). Before the establishment of the long-term regulatory framework for open banking (LTRF), any Order related activity will continue to be subject to CMA oversight. Once the LTRF is sufficiently certain, and therefore the regulatory framework for the Future Entity, the CMA will review the Order to assess whether the Order is no longer appropriate or needs varying. Following the CMA’s review and once the LTRF is in place, the FCA states that there will no longer be a disaggregation between Order and non-Order work.
Subject to legislation, as a regulated DUAA interface body the Future Entity will be required to act in accordance with rules and guidance set by the FCA. This could include expected outcomes and/or functions.
Separately, the FCA expects there to be an industry-led competitive layer of open banking schemes, which will operate commercially. The commercial schemes will establish the rules governing how firms interact and resolve disputes. The FCA is undecided on whether the schemes should be run for profit or not.
The schemes will interact with the Future Entity by using the common API standards that it develops. However, the schemes can innovate beyond the Future Entity’s standards to provide premium services.
MLA owner/operators will own commercial schemes and establish the terms of each commercial scheme for individual third party providers (TPPs) and banks covering commercial aspects such as disputes, costs, and API standards. According to the FCA, this approach reduces the cost and inefficiencies associated with negotiating bilateral relationships and having fragmented technical standards for APIs.
The feedback statement suggests that the role of the Future Entity may evolve or expand into other areas including open finance, which facilitates access to financial payments data beyond payment accounts (such as for mortgages, utilities or income verification). This can increase the accessibility of financial services and products for consumers.
The FCA notes that open finance has not yet had the same level of attention as open banking. However, open finance will become a bigger point of focus for the FCA in the coming years as part of its five year strategy. The FCA has launched a Smart Data Accelerator to help in testing use cases, encourage the development of solutions, and help shape regulatory policy for open finance and will publish a roadmap for open finance by March 2026.
It should also be noted that open finance featured in the government’s July 2025 Financial Services Growth and Competitiveness Strategy (see our related article for more information)
Additionally, the DUAA provides powers to enable the establishment of “smart data” schemes to continue the UK open banking scheme and extend its benefits in an open finance scheme, with Part 1 (Access to customer data and business data) of the Act having come into force on 20 August 2025 under the Data (Use and Access) Act 2025 (Commencement No. 1) Regulations 2025 which were made on 21 July 2025.
Authored by James Black, Ada Nourell and Virginia Montgomery.