The Canadian government plans to introduce legislation this spring to establish the foundational elements of an Open Banking Framework. This legislation aims to expand the mandate of the Financial Consumer Agency of Canada (FCAC) to include oversight, administration, and enforcement of consumer-driven banking. The FCAC will be responsible for establishing framework elements concerning scope, system participation, safeguards related to integrity and national security, as well as common rules covering privacy, liability, and security.
The forthcoming legislation represents the first of two pieces of legislation to implement the country's Open Banking Framework, focusing initially on governance, scope, and criteria and process for the technical standard. The remaining elements of the framework will be legislated in fall 2024.
Participants in the Open Banking Framework will be required to share data upon a consumer's request, including data related to chequing and savings account operations, investment products available through online portals, and lending products such as credit cards, lines of credit, and mortgages. This scope of data sharing is expected to encompass more accounts than currently proposed by the US Consumer Financial Protection Bureau (CFPB).
Canada's Open Banking Framework will include principles and processes for the selection of a single technical standard for data sharing, ensuring the standard is fair, open, accessible, and interoperable with the CFPB's Personal Financial Data Rights rule.
Additionally, Budget 2024 announced the creation of a Senior Deputy Commissioner of Consumer-Driven Banking at the FCAC, tasked with fulfilling the organisation's consumer-driven banking mandate. The government has committed to reviewing Canada's Consumer-Driven Banking Framework after three years to assess its effectiveness and alignment with Canadian needs.
According to openbankingexpo.com, the initiative to implement Open Banking gained momentum following mounting pressure from industry groups and the opposition party, leading to the passage of Conservative MP Ryan Williams' Bill C-365, accelerating the implementation of a consumer-led banking system for Canadians.
According to Canada.ca, the country's consumer-driven banking framework was designed to enable Canadians to safely access innovative financial products and services, such as credit-building apps and account aggregators, which can potentially improve their financial well-being.
The policy objectives of the Consumer-Driven Banking Framework revolve around safety and soundness, protecting Canadians' financial well-being, and supporting economic growth and international competitiveness. These objectives are pursued by addressing security risks, ensuring consumer access to financial data, and establishing a clear regulatory framework to support innovation and competition.
The core elements of the framework include governance, scope, accreditation, common rules, national security safeguards, and technical standards. These elements govern oversight, data types, participant requirements, consumer protection rules, national security measures, and technical standards for data flow within the framework.
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