The UK has been a global pioneer in open banking, transforming how individuals and businesses interact with their financial data. From seamless account aggregation to innovative payment solutions, open banking has already changed the financial services landscape. But as adoption grows and expectations rise, the question becomes: how do we ensure long-term stability, trust and innovation in this fast-moving ecosystem?
The Financial Conduct Authority (“FCA”)’s newly published FS25/4 – Design of the Future Entity for UK Open Banking provides an answer. It sets out a framework for a new Future Entity that will serve as the backbone of open banking in the UK, delivering the governance, standards and oversight needed for sustainable growth. The Future Entity builds on the work of the Joint Regulatory Oversight Committee (JROC) and marks the transition away from the CMA’s original open banking remedies, ensuring continuity while expanding scope.
This is not merely another regulatory development. It is a pivotal initiative that could define the next decade of open banking and lay the groundwork for a broader transition to open finance.
What Is the Future Entity?
The Future Entity is envisioned as the independent, not-for-profit organisation responsible for setting and maintaining the foundations of open banking in the UK. Its purpose is to make sure the ecosystem is:
- Consistent: through the implementation of common technical standards and baseline rules
- Reliable: by monitoring performance and resolving systemic issues
- Inclusive: ensuring that innovation works for consumers, SMEs and financial institutions of all sizes
- Future-proof: able to adapt as new use cases, from open finance to smart data
Importantly, the Future Entity will not replace regulatory authorities. Enforcement of compliance will remain with the FCA, PSR and, where relevant, the CMA, the Future Entity’s role is standards and coordination, not supervision.
In practical terms, the Future Entity will:
- Set minimum Application Programming Interface (“API”) standards for open banking to guarantee interoperability across providers
- Maintain core services such as central directories and participant certification
- Monitor compliance with baseline requirements, giving regulators and consumers confidence in system resilience
- Provide a neutral forum where banks, fintechs, regulators and consumer groups can collaborate
Importantly, unlike regulatory bodies, the Future Entity will not have enforcement powers. Rather, it will operate as a trusted standards-setting organisation, with industry engagement and accountability embedded within its governance structure.
Governance: Independence and Accountability
To ensure fairness, the FCA proposes that the Future Entity will:
- Be incorporated as a company limited by guarantee, operating on a not-for-profit basis
- Have its board appointed by an independent selection committee, rather than by existing industry participants
- Be financed through a hybrid funding model, combining contributions from regulated firms, service fees and potentially government support
One area of debate is funding: while a hybrid model spreads costs, smaller FinTech’s have raised concerns about a disproportionate financial burden, which regulators are monitoring closely.
This governance approach is designed to build legitimacy. It avoids dominance by a single group of stakeholders while ensuring the entity has the authority to deliver its mandate.
Balancing Standards and Innovation
One of the most notable features of FS25/4 is its approach to harmonising standardisation with innovation. The Future Entity will define a shared baseline of technical specifications and compliance requirements. This will provide a solid foundation for:
- System-wide consistency and interoperability, reducing complexity for all participants
- Commercial schemes, often led by industry consortia, offering value-added services, faster deployment or bespoke solutions on top of the shared baseline
Where market mechanisms fail to deliver (e.g. due to insufficient incentives or coordination gaps), the Future Entity may also operate such schemes directly. This layered model ensures both reliability and space for innovation.
During the transition period, interim arrangements will remain in place to ensure continuity of services and avoid disruption for existing providers before the Future Entity is fully operational.
Why This Matters
For Consumers
- A more consistent and secure open banking experience across providers
- Faster access to innovative services, from smarter budgeting tools to instant payments
- Greater trust, thanks to oversight and monitoring
For Businesses and Fintechs
- A clear framework for compliance and integration, reducing costs and complexity
- The ability to innovate freely above the baseline without worrying about fragmentation
- Confidence that competitors are meeting the same minimum requirements
For the Financial Ecosystem
- Stronger interoperability across banks, fintechs and third parties
- Reduced risk of market fragmentation or inefficiency
- A framework that supports scaling into open finance, covering pensions, insurance, utilities and more
Internationally, the UK is not alone: the EU is advancing PSD3 and the Financial Data Access (FiDA) framework, while countries like Australia and Brazil are embedding open finance models. Positioning the UK Future Entity as a credible global benchmark will be vital to maintaining its leadership role.
What Happens Next?
The FCA is now moving towards implementation. The FCA has indicated that implementation will be phased, with some responsibilities and interim governance structures introduced ahead of the Future Entity’s full establishment.Key milestones include:
- Summer–Autumn 2025: Industry workshops to shape the Future Entity’s detailed design
- End of 2025: Final decisions on structure, governance, and operational responsibilities
- Beyond 2025: Gradual establishment of the Future Entity and preparation for the transition to open finance
The FCA has made clear that this process will be collaborative. Industry participants, consumer representatives and technology leaders will all have a voice in shaping how the Future Entity operates.
How Complyport Can Help
As the UK moves into this new era of open banking and eventually open finance, firms must prepare for increasing technical and governance standards, interoperability requirements and enhanced monitoring expectations.
Complyport can assist by:
- Conducting readiness assessments: We evaluate your current systems and frameworks to ensure alignment with the upcoming Future Entity requirements.
- Advising on compliance with FCA and Payment Services Regulations (PSRs): Our experts provide guidance to help you meet regulatory obligations under the FCA Handbook and PSRs.
- Providing training and policy development: We deliver tailored training and develop internal policies to prepare your teams for the next phase of open banking.
We have a proven track record of supporting firms through regulatory transformation. Don’t wait until these changes are mandatory, start preparing now to maintain your competitive edge.
Contact us today to book a meeting with a Complyport Subject Matter Expert.
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