Financial Consumer Agency of Canada to Oversee Open Banking Framework

Canada's open banking framework empowers consumers, promotes competition, and will be overseen by the Financial Consumer Agency of Canada, marking a significant step towards a consumer-driven banking system.

Safak Costu
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Financial Consumer Agency of Canada to Oversee Open Banking Framework

Financial Consumer Agency of Canada to Oversee Open Banking Framework

The Canadian government has announced that the Financial Consumer Agency of Canada (FCAC) will be responsible for overseeing the country's proposed open banking framework , which aims to give consumers more control over their financial data. The FCAC will be tasked with administering and enforcing the open banking legislation, also known as 'consumer-driven banking.'

Open banking, a system that allows banks and fintechs to securely share financial data with customers' consent, is expected to empower consumers, facilitate easier bank switching, and enable innovative financial services. The government has allocated $1 million over the next year for the FCAC to adopt its new responsibilities and launch a consumer awareness campaign.

Why this matters: The appointment of the FCAC as the oversight body for open banking marks a significant step towards the implementation of a consumer-driven banking framework in Canada. This move is expected to promote competition, innovation, and consumer empowerment in the financial sector.

The decision to have a government-led entity oversee the open banking system, rather than involving the sector's large lenders, has been a point of contention among industry players. The launch of the consumer-driven banking framework also includes measures to cap non-sufficient funds fees charged by banks at $10 and require banks to notify customers when they are about to be charged such fees.

The government is also negotiating enhanced agreements with banks to update their low-cost bank accounts, including expanding eligibility. Additionally, the government is providing $4.1 million over the next three years for the Department of Finance to conduct policy work to establish a consumer-driven banking oversight entity and framework, including the implementation of a national security regime.

The FCAC's mandate will be expanded to include oversight, administration, and enforcement of the open banking framework, including accrediting entities, maintaining a public registry, and overseeing the technical standard. The framework will be implemented in a phased approach, starting with mandatory participation for Canada's largest retail banks and allowing other entities to opt-in.

Key Takeaways

  • FCAC to oversee Canada's open banking framework, empowering consumers.
  • Open banking to promote competition, innovation, and consumer control over data.
  • $1M allocated for FCAC to adopt new responsibilities and launch awareness campaign.
  • Measures to cap NSF fees and expand eligibility for low-cost bank accounts.
  • Phased implementation of open banking framework, starting with largest retail banks.