CMA clarifies definition of VRPs for Sweeping

The CMA mandated the use of Variable Recurring Payments (VRPs) as the mechanism for implementing Sweeping - the automatic transfer of money between a customer’s own accounts - last July over the objections of some of the country's biggest banks.

VRPs allow customers to connect authorised payments providers to their bank account so that they can make payments on the customer’s behalf within agreed parameters.

However, amid some confusion over what use cases fall within the scope of the Sweeping definition, the CMA has stressed that it only has powers to mandate the practice to address problems identified in its 2017 retail banking market investigation.

Therefore, Sweeping can be used to move money between current account providers, including to avoid falling into an overdraft on one of them; move money to accounts that are used for unbundling overdrafts from a current account and other alternative forms of credit that closely compete with overdrafts; move money to accounts that are used for loan repayments as part of a service that provides alternative forms of credit to an overdraft; move money to a credit card account; and move money to a cash savings account that is capable of paying interest.

Sweeping cannot be mandated for: making e-commerce purchases; moving money to accounts that are used to purchase cryptocurrency and other similar assets; moving money to use online gambling and gaming services; moving money to accounts used to make foreign exchanges or international money transfer services; or moving money to use investment products, including pensions.

Charlotte Crosswell, OBIE Chair and Trustee, says: “We welcome the clarity provided by the CMA today and look forward to the new Sweeping propositions coming to market later this year. Delivering better outcomes continues to be a key focus of our innovative ecosystem and Sweeping is a great example of how consumers and SMEs can make their money work harder with better interest rates and overdraft alternatives.”

Maria Palmieri, head of public policy at open banking player Yapily, called the clarification a "step in the right direction" but cautioned that "only when policy mandates move beyond Sweeping will VRP be a true game-changer. As more VRP APIs become available, more innovative use cases for open banking will be realised."

More critical comment to the news as reported by Finextra cropped up on Twitter:

That is the outcome the banks have lobbied for at the expense of UK public. This is nonsensical on several levels. It’s very disappointing to have 12 months of my work diluted down like this. The CMA agreed with my recommendation last year. They shouldn’t have U-turned like this.

— Mike Kelly (@mikekelly85) March 15, 2022