Radical change for our personal finances comes into force and very few customers seem to know about it
Dubbed ‘Open Banking’, new rules aiming to encourage more competition in the financial services industry by opening archives of spending and allowing you to share personal financial information with companies, other than your bank, comes into force on Saturday 13th January.
With only 3% of customers switching banks (according to the Competition and Markets Authority), the new rules aim to encourage competition and innovation in financial services and give customers better products in turn.
So what is open banking?
The idea is that ‘opening’ up your data on transactions, will allow companies to know what your spending, analyse your data and guide you to better money management or services that would suit you, whatever that may look like.
Currently, your personal financial information (account types and spending habits) sits with your bank.
With open banking, essentially the ownership of this information will be transferred to you, the customer and you can choose to share your data. The key point here is that it is your choice – you do not have to share your data. But from the 13th January, all UK regulated banks, must let you share this information should you wish to do so.
Who will have access to my data?
If you want to share your data, and we’re not saying you shouldn’t, you must take care in understanding who you are sharing it with and what benefit it is to you. Ensure the provider appears on the FCA’s register and the Open Banking Directory and that way you will be protected by your bank if something goes wrong.
Providers must also comply with data protection rules and that includes the new regulations coming into force in May 2018. They need to tell you what data they are going to use, what they indent to do with it and how long for. If you are unsure, then make sure you ask before allowing access.
While it’s true that third party providers may suggest an alternative product of benefit to you, it is important for everyone to be aware that there is no guarantee that a provider will be impartial. It may look like they have searched the market to give you the best financial deal but they may be in receipt of some form of commission to suggest a particular product.
With safeguards now in place, open banking may revolutionise the way we bank however there are still uncertainties and it is for you to decide if you are happy to share your data.
If you want to know more and better understand the technicalities of open banking, please visit the Open Banking website or talk to us for more information.
Visit our how to get advice pages for ways to contact us.
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