Simpler Cloud Accounting Bank Rules Are Ahead
Good news for the many Cloud accounting clients that must regularly reauthenticate open banking, in software like Xero. The Financial Conduct Authority (FCA), in a recent consultation on payment services and electric money, proposed to exempt open banking users from the 90-day reauthorisation rule.
“Great news for our cloud accounting clients. While cloud accounting is clearly already a much simpler way to do business, with lots of benefits like time savings and ease of use remotely, this 90-day rule is irksome. Currently, every quarter, each client needs to reauthenticate their banking credentials online. This can take only 10 minutes with the documents to hand, but it’s a friction point and is inconvenient for our clients. We welcome FCA’s recommendations and an even simpler cloud experience.” (Cerith Williams, LHP Client Manager)
What is open banking?
Open banking is a secure way to give providers access to your financial information and is currently used by over 3 million consumers and businesses in the UK. At LHP, many clients use open banking within their cloud accounting package, bringing them time and money savings.
Why is the change proposed?
The recent FCA consultation paper ‘Changes to the SCA-RTS’, which looked at technical standards on secure communications, advised that customers should not need to reauthenticate every 90 days, when accessing their account through an internet application. The FCA described the rule as a ‘barrier to competition and innovation’ in the UK payments landscape.
What does this mean for Cloud clients?
Clients using Cloud accounting software with open banking, will in the future, no longer need to reapply their banking credentials every quarter, something which creates inconvenience and extra time with an accountant, who has to guide you through the process.
The FCA acknowledges the fact that reauthorisation is burdensome for customers, ‘creating friction in the user experience and hindering uptake of open banking services’.
The upshot…no more need to refresh bank accounts for bookkeeping and even more time for clients to focus on the bigger picture.
How does this impact audits?
This could benefit audits in the future, when the industry has moved towards an always-on real-time audit. Currently audits are done yearly, so this 90-day rule has no impact.
If you are a thinking of moving to the Cloud to free up time and money, get in touch with out dedicated team of in-house cloud specialists at LHP by emailing email@example.com or ringing 01267 237534.