UK FCA letter to trade associations on establishing a Future Entity for open banking

The UK Financial Conduct Authority (FCA) has published a letter (dated 19 December 2025) to trade associations outlining next steps towards establishing the Future Entity (FE) that will serve as the UK's long‑term open banking standards‑setting body. The FCA reflects on progress made in 2025, noting industry collaboration on the multilateral agreement for variable recurring payments (VRP), the creation of the transitional multilateral agreement operator and associated governance arrangements, continued development of the VRP commercial model and broader industry preparation for the increased adoption of open banking and VRP services.

Looking ahead, the FCA expects 2026 to be a landmark year, with live transactions flowing through the VRP scheme expected in Q1. It also anticipates that HM Treasury will introduce legislation under the Data (Use and Access) Act 2025 (DUAA) granting the FCA new rulemaking powers for open banking. The FCA plans to consult on new rules for the long‑term regulatory framework enabled by these powers. In parallel, the FCA expects industry to establish a body capable of becoming the FE, which it wants to be the UK's primary standards setting body for application programming interfaces (APIs). Subject to legislation, the FCA expects to use its powers under the DUAA to support this objective.

The FCA confirms that currently there are two organisations, Open Banking Limited and Smart Data Group, that have expressed interest in taking on this role. It asks firms to engage with these organisations, as well as any others, and to submit their preferred option by no later than 30 January. To support industry decision-making, the FCA will commission an independent consultant-led assessment of the proposals or, if industry aligns behind a single proposal, an assessment of that preferred option. The FCA expects this process to start in February. A formal decision on the FE will be made at a later date as the long-term regulatory framework continues to develop.

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