But the big question is how open Canadians will be to sharing their financial data
The federal budget took Canada a step closer to open banking with the decision to give the Financial Consumer Agency of Canada (FCAC) oversight of the required framework.
But it could still be some time before we start to see open banking at the level already adopted in the UK and Australia, especially given reticence shown by Canadians in giving access to their personal and financial data to fintechs and other businesses.
FCAC this week welcomed its expanded mandate with the passing of the Budget Implementation Act 2024 meaning it officially assumes the responsibility of overseeing, administering and enforcing Canada's Consumer-Driven Banking Framework.
"FCAC has a strong track record in consumer protection and the supervision of federally regulated financial institutions,” said interim commissioner Werner Liedtke. “The Agency has also led multiple consumer awareness campaigns to help Canadians navigate an increasingly digital financial marketplace. The evolution of our mandate over the past 23 years positions us to effectively oversee and promote an innovative and competitive framework that benefits all parties."
The agency was granted $1 million in the budget to fund a campaign informing Canadians about the new framework for open banking.
The framework includes requirements for the robust and secure sharing of data relating to financial products such as deposit accounts, registered and non-registered investment accounts, lending products and payment products.
But the first step in the legislation will only allow partial access to Canadians’ financial management with ‘read-only’ capabilities.
Former FCAC deputy commissioner and current Torys LLP partner Brigitte Goulard recently shared with Canadian Lawyer that the next stage, allowing the use of third-party apps to pay bills or make changes to accounts are some way off. Regulators and operators will want to be certain to have ironed out issues with the read-only phase first.
Next steps
There will be further legislation in the fall that will address some key elements of open banking in Canada such as liability, consent, and technical standards.
Goulard clarified that the big banks will have no choice but to participate in open banking, while smaller entities including fintechs, securities dealers, and credit unions will have the option to participate, but will have to accept standards and regulations.
“If you decide to opt in, then you become a participating entity in the framework, and you must comply with the requirements of the framework, which are not yet determined, she says, and subject to the oversight of the FCAC,” she said.
