The Financial Conduct Authority (FCA) has said that Open Finance, the extension of Open Banking-like data-sharing to a wider range of financial products, could offer “significant benefits” following a Call for Input.

The authority received 169 responses, which showed that open finance could offer advantages to consumers, including increased competition, improved advice, and improved access to a wider and more innovative range of financial products and services.

Open Finance would build on Open Banking by offering a broader scope of products, including savings, investments, pensions, and insurance.

But the organisation said that Open Finance would also create or increase risks and raise new questions of data ethics.

“Appropriate regulation will be essential to managing those risks and giving consumers the confidence to use open finance services,” said the FCA.

Responses demonstrated that Open Finance could be a “significant undertaking” for firms, which the FCA said was particularly important “given the change in operating environment as a result of Covid-19 and its ongoing impact.”

The Call for Input also found that the implementation of Open Finance should be "proportionate, phased and driven by consideration of how consumers will use and interact with it."

“There is a degree of consensus around the key building blocks needed for open finance to develop in the interests of consumers,” said the UK watchdog. “These include a legislative and regulatory framework, common standards and an implementation entity.”

The FCA is continuing to work with the government on the design of future Smart Data Legislation.

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