The competition regulator has relinquished its oversight of Britain’s open banking unit to the City watchdog after it faced harsh criticism following a string of scandals.
The Financial Conduct Authority will lead a new committee, alongside the payments regulator, that will be responsible for regulating open banking technology and overseeing the Open Banking Implementation Entity (Obie)’s transition to a new permanent body.
Obie was set up in 2016 in a state-backed effort to encourage big banks to share customer information to boost competition and the Competition Markets Authority was tasked with overseeing the venture.
However, the unit became engulfed in a bullying scandal that led to the resignation of its chairman last October.
The Telegraph has since revealed details of the mistreatment of staff at Obie, including on-the-spot sackings, verbal abuse, sexism and a culture of cocaine use.
The CMA will be represented on the new committee but will hand over its leading role in overseeing open banking regulation to the FCA. The Treasury will also be represented.
A City source who previously worked with Obie said: “The CMA are effectively washing their hands of open banking and handing it over to the FCA and the Payments Systems Regulator.”
In October, an independent report found that a “toxic culture” of bullying and intimidation existed at Obie.
It also hit out at the CMA and the banks that funded the unit, saying they failed to put adequate governance mechanisms in place from the outset and failed to act when problems became apparent.
Since the publication of the report, The Telegraph has revealed that Alison White, the expert called in to root out the scandal, condemned the CMA’s handling of the investigation in a scathing 10-page letter to the regulator’s leaders.
The new regulatory committee will work with Obie in overseeing the sector, but the unit’s future remains uncertain as the watchdogs and the Treasury mull the creation of a new entity with a “sustainable” funding model.
Andrea Coscelli, CMA chief executive, said: “The CMA has carefully considered the appropriate future arrangements to boost open banking so that its significant benefits can be realised even more widely. We have today outlined the core principles that will ensure the new entity successfully picks up the reins.”
Henk Van Hulle, Obie’s new chief executive, said: “We have already made positive organisational, governance and operational changes to ensure we are best placed to take these arrangements forward.”