The Financial Conduct Authority (FCA) has published a report on the potential of open finance across financial services, including its ability to reform mortgage sales and advice.
The regulator said it was “prioritising high-impact use cases” where open finance would deliver benefits the fastest, improving consumer access to mortgages and SMEs’ access to lending.
It said open finance could “harness new technologies to change the way sales and advice are delivered in the mortgage market”. The FCA will explore opportunities to improve access to mortgages, while collaborating with the government’s smart data scheme to reform home buying.
The FCA said its use could help people and businesses manage money more effectively, access better deals and make payments directly from their bank accounts.
Open finance facilitates the secure sharing of data across a broad range of products and services, building on open banking, which allows consumers and businesses to share access to payments data through apps.
This can reduce the need to share data multiple times when carrying out tasks such as applying for a mortgage.
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The FCA will gather evidence and information from its Techsprints programme, where firms tested the capabilities of open finance in the mortgage sector. It will publish the outcomes by Q3.
In Q2 and Q3, the regulator will hold a Mortgages Policysprint to address challenges and test policy on open finance, before publishing its findings in Q4.
The FCA will work with the Treasury on a regulatory framework for open finance by the end of 2027. It will also support firms in introducing open finance products sooner, where they can already access data, and permissions are in place.
David Geale, executive director of payments and digital finance at the FCA, said: “Open finance has the potential to transform how people interact with financial services.
“By giving consumers and businesses more control over their own financial data, we can help them access credit, secure better deals and receive more customised support – while fuelling innovation, competition and supporting economic growth.”
More accurate affordability assessments
In its report, the FCA published a case study of how mortgage borrowers could leverage open finance. Its example showed a borrower who used their mortgage and financial data, along with insight on interest rates, to understand how overpayments could impact their budget.
It showed the borrower deciding to pay off their mortgage five years earlier by overpaying, while tracking their finances to opt out if their expenses increase.
Damien Burke, head of regulatory practice at Broadstone, said open finance could transform how consumers access financial services and giving lenders a more complete, real-time view of a borrower’s finances would make affordability assessments more accurate.
Burke said: “For consumers, this could translate into more realistic borrowing limits and better-matched products, reducing the risk of both overextension and unnecessary rejection. It also creates an opportunity for lenders to design more flexible solutions – whether that’s adjusting repayment structures, offering variable recurring payments, offering more responsive payment stress testing or identifying earlier interventions for those at risk of financial strain.
“The success of open finance in the mortgage market will depend on how effectively lenders embed these insights into underwriting processes while maintaining robust risk controls. If implemented well, it could support a more inclusive lending environment that balances innovation with responsible affordability.”