FCA sets out open finance plans to boost credit access
The Financial Conduct Authority has set out its vision for open finance, saying it could give consumers and businesses greater control over their financial data.
Open finance would allow people and businesses to securely share financial data with a wider range of financial service providers. The FCA said this could help them access mortgages, investments, savings products and pensions, while giving firms a broader view of their finances.
Its initial focus will be on areas where shared data could directly affect borrowing and money management. The regulator plans to explore how open finance could help small and medium-sized enterprises improve access to credit and cut the time needed for loan applications. It will also examine how it could support consumers managing mortgages or improving access to them.
Priority areas
The move builds on open banking, which allows customers to share payment account data with authorised third parties. Open banking now has about 17 million users in the UK, according to figures cited by the FCA, representing nearly one in three adults.
Research cited by the regulator, from Open Banking Limited and EY, suggested that the combined economic impact of open banking and open finance could reach £7.4 billion a year within five years. The FCA linked the new work to wider efforts to encourage competition and broaden access to financial services.
David Geale outlined the intended direction of travel for the initiative. "Open finance has the potential to transform how people interact with financial services. By giving consumers and businesses more control over their own financial data, we can help them access credit, secure better deals and receive more customised support - while fuelling innovation, competition and supporting economic growth," said David Geale, Executive Director for Payments and Digital Finance at the Financial Conduct Authority.
Regulatory work
To develop the policy, the FCA will work with industry, consumer groups and other regulators to identify practical use cases for open finance. That work will be carried out through its Smart Data Accelerator and the PRISM Taskforce, or Prioritisation and Real-world Insights Selection Matrix.
The Smart Data Accelerator is intended to provide firms with a controlled environment to test emerging technologies and potential open finance applications. The PRISM Taskforce is designed to create a repeatable method for assessing the impact of different use cases.
The regulator will also work with HM Treasury on options for a regulatory framework for open finance by the end of 2027. In the meantime, firms that already have access to relevant data and hold the necessary permissions will be supported in bringing open finance products to market sooner.
The broader policy programme will run alongside separate work on open banking. The FCA plans to consult on a proposed long-term regulatory framework for open banking before the end of 2026.
Industry groups welcomed the regulator's direction, arguing that broader data sharing could open up new financial products and services. They also pointed to a possible role for open finance in artificial intelligence services that rely on permissioned access to customer data.
Adam Jackson commented on the plans from the fintech sector's perspective.
"Just as open banking has sparked the growth of many UK fintechs, so open finance can power a new wave of innovation. By unlocking high-quality data in a way that secures consumer trust, open finance can be a foundation for widespread adoption of agentic AI. We support collaboration between industry and the FCA to deliver the roadmap at pace, enabling agreement on priority use cases and datasets, and appropriate regulatory action to open these up to competition and innovation," said Adam Jackson, Chief Strategy Officer at Innovate Finance.