The Canadian government has confirmed its commitment to establishing an open banking legislation by the end of this year, a move that has been long anticipated following a detailed three-year study comparing with the UK’s approach.
According to Finextra Research, the government’s pledge aims to facilitate easier access for third-party financial services providers to consumer banking data, enhancing competition and innovation in the financial sector.
In the recent federal budget, officials outlined a dual-legislation strategy set to roll out in 2024, which will define the open, or “consumer-driven,” banking sector. This new framework will consist of six pivotal elements: governance, scope, accreditation, common rules, national security, and technical standards. The Financial Consumer Agency of Canada (FCAC) is set to play a crucial role, equipped with a C$1m budget for the fiscal year 2024-2025 to oversee and enforce the new regulations. Additionally, the Department of Finance will receive C$4.1m spread over three years to support the establishment of a robust governance structure, including a national security protocol.
Despite these advances, the exact date for when these regulations will become effective remains unclear, causing some unrest within the fintech community. Recently, two advocacy groups have intensified their campaigns urging for a faster legislative process, highlighting fears that Canada could lag behind other nations in fintech innovation.
Canada’s approach to open banking, which involves sharing data with third-party providers under stringent guidelines, is seen as a critical step towards modernising the financial landscape. “This framework represents a significant milestone in Canadian financial services, promoting higher transparency and fostering a competitive market,” FCAC head of oversight commented.
In summary, while the timeline for implementing open banking in Canada is set for this year, the specifics of the framework’s activation are still pending. This has sparked calls from various fintech entities for greater clarity and expedited processes to maintain Canada’s competitive edge in the global financial technology arena.
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