As widely predicted, the Canadian Minister of Finance has included plans to support open banking in the federal budget. Open banking, referred to as consumer-driven banking in the budget, will be overseen by the Financial Consumer Agency of Canada. The agency will receive C$1m of government funding to enable it to meet its expanded mandate.
In particular, it will be responsible for system participation, safeguards in respect of integrity and national security, and common rules covering privacy, liability, and security.
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An estimated nine million Canadians currently share their financial data by providing confidential banking credentials to service providers. The government says this raises security, liability, and privacy risks to consumers and the financial system. It wants to make it safer and more secure for Canadians to share their financial information and access new financial tools.
The government intends to introduce the first of two pieces of legislation to implement open banking. It will start with key elements, such as governance, scope, and criteria and process for the technical standard. Remaining elements of the proposals will be legislated in late 2024.
The government will mandate participation for banks that meet a specified threshold for retail volume. This threshold will scope-in Canada’s largest retail banks. There will be clear requirements for how various entities such as fintechs, can enter and exit the Consumer-Driven Banking Framework.
The government will review Canada’s Consumer-Driven Banking Framework after three years to ensure it continues to meet core policy objectives and reflects the needs of Canadians.
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