FCA set to remove 90-day reauthentication requirement to support open banking



717_2022-01-10-11-36-16am.gif
The Financial Conduct Authority (FCA) is set to scrap the requirement for clients to reauthenticate every 90 days with their account servicing payment service provider when accessing account information via a third-party provider (TPP).

Under the new regulation, TPPs will instead need to reconfirm customers’ consent every 90 days.

The previous rules stipulated that users had to reauthenticate their permission with every TPP they shared their financial data with every three months.

According to the feedback received from 90 companies during a consultation period, which ended on 14th May 2021, this caused poor customer experiences and high customer drop-out rates.

The decision was made in order to remove the barriers identified to the continued growth of open banking and support competition and innovation in the sector.

“We consider that these measures are proportionate, taking into account the level of risk,” stated the FCA.

“Having considered this feedback, we continue to believe that our proposal strikes an appropriate balance between consumer protection and convenience.

“Our changes will support the continued uptake of open banking, leading to improved competition in the sector. 

“They will also support the development of better and more varied products and services for consumers, while maintaining appropriate consumer protections.”

Nicolas Weng Kan, CEO at Yolt, welcomed the removal of the three-month reauthentication requirement.

“While this may be seen as a small change for some, we see this as a tremendous move forward towards the mass adoption of open banking,” he added.

“Requiring continuous strong customer authentication every 90 days creates friction when using services from a TPP  and this barrier increases the probability of customers dropping off, ultimately hindering people and businesses from realising the benefits of open banking services.

“Breaking down the barriers to entry and improving the front-end customer experience is going to significantly help open banking providers, such as Yolt, to innovate and help businesses and their customers unlock the full potential of open banking. 

“We are thrilled to see the regulator taking such a positive step forward."

Leave a comment