LONDON (Reuters) - Britain’s markets watchdog warned banks on Wednesday it would intervene if they use concerns over customer account security as an excuse to stifle competition on the high street.
The European Union introduced rules in January that would allow licensed start-ups or retailers to take payments directly from a bank account, or tap transaction history from an account in order to recommend cheaper overdrafts or loans offered elsewhere.
The aim is to open up banking to competition via smartphone apps, particularly from financial technology or fintech firms.
Several lenders have been given more time by the Competition and Markets Authority (CMA) to put in place new rules, delaying the ability of fintech firms to compete straight away in some cases.
The banks say they needed more time to ensure the technology for sharing data with rivals is secure, but Andrew Bailey, chief executive of the Financial Conduct Authority, told lawmakers on Wednesday this could not be used as an excuse to fend off competitors.
“One thing that we and the CMA will be very alert to (is) that if the banks seek to use the security argument to suppress competition as opposed to raising standards of security, then clearly that would require intervention by one or both of us,” Bailey said.
The FCA has already authorized 40 firms under the new rules, with more applications for licenses in the pipeline.
“It will frankly take a while to take off,” Bailey said.
Reporting by Huw Jones; Editing by Adrian Croft