The Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) are establishing an independent company to advance variable recurring payments (VRPs) in the United Kingdom, marking a significant step in modernising the country's financial infrastructure.

Open Banking Limited will lead the initiative to create an independent central operator for coordinating VRPs, enabling third-party financial service providers to access banking information and initiate payments on behalf of consumers and businesses.

The new system is expected to launch live services in 2025, allowing consumers to make automated recurring payments to utility companies, government entities, and financial services firms. Currently, open banking serves over 11.7 million users in the UK and processes more than 22.1 million payments monthly.

"We stand ready to play a leading role, embracing a digital-first approach," wrote Nikhil Rathi, chief executive officer of the FCA, in a letter to the Prime Minister, Chancellor, and Secretary of State.

Variable recurring payments are designed to provide consumers with greater control over regular expenses. Users will be able to set limits on payment amounts or monthly spending, potentially reducing unexpected expenditures and lowering processing costs for businesses.

The initiative builds on progress achieved in 2024, supported by voluntary funding from 20 industry-leading firms. Notable advancements included improvements in fraud detection tools and strengthened consumer protections.

The FCA and PSR have emphasised the importance of maintaining collaborative momentum. A joint steering committee will oversee ongoing initiatives, ensuring alignment with the UK's National Payments Vision and government priorities.

The regulators are also working to develop the commercial frameworks required to expand VRP use and enhance open banking's role in e-commerce. This includes potential improvements in digital infrastructure, such as enhanced digital identity verification.

"It is critical that the collaboration seen in 2024 across the industry continues this year," the regulators stated in their joint announcement.

The move is part of a broader strategy to modernise financial regulations and support economic growth, with the potential to significantly transform how consumers and businesses manage recurring payments in the United Kingdom.

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