The financial regulator is looking to create new advice services for mass market consumers with the help of open data.
In a paper published on its website today (December 17) the Financial Conduct Authority backed open finance as a means to giving consumers greater control over their mortgages, investments and pensions.
The regulator said the concept of allowing financial institutions to share data about their client had the potential to deliver "transformative benefits" to consumers and help widen access to advice.
It said open finance could create "new advice and financial support services for mass market consumers making financial decisions, making it easier to share comprehensive information with advisors".
At the same time the regulator flagged greater harm where advice is not taken, if savers deemed it easier to carry out larger transactions such as pension consolidation or investment transfers.
The FCA did not detail what a new form of mass market advice would look like but it has asked the industry for its views on engaging with open finance.
Personal dashboards, the watchdog said, could help consumers understand their financial position. For example, whether to put an additional £100 into a savings account, mortgage overpayment or pension.
Christopher Woolard, executive director of strategy and competition at the FCA, said data and technology were increasingly driving changes in financial markets and the regulator was keen to engage with this trend.
Mr Woolard said: "As a regulator, we need to understand how this change will shape markets and shape regulation in the future.
"We want to understand how open finance can develop to best meet consumers’ needs and enhance competition in the interests of consumers. We also want to understand what role we should play in supporting it."
Last month the FCA said open finance could "substantively change" the nature of competition in the market, allowing clients to see their financial products in one place. For instance, they might see their pension savings through their personal banking app.
But the regulator also warned of pitfalls in this growing trend, specifically the risk of "out of date, incorrect or incomplete data" resulting in incorrect advice, a switch to an inferior product or an inaccurate price.
The FCA will close its call for input in March next year an expects to publish feedback in the summer of 2020.
What do you think about the issues raised by this story? Email us on email@example.com to let us know.