The Canadian government has committed to introducing open banking legislation by the end of the year and has appointed the Financial Consumer Agency of Canada (FCAC) to oversee the new system.
After a three-year investigation into the feasibility of aligning with the UK’s approach to open banking, which allows third-party financial service providers access to banking data, the government is progressing towards establishing an open banking framework. Initially promising regulatory reforms for early 2023, the government has now stated in the federal budget that it will present two pieces of legislation this year focused on consumer-driven banking.
This legislation will encompass six essential framework components: governance, scope, accreditation, common rules, national security, and technical standards. Governance responsibilities will be entrusted to the FCAC, which will receive C$1 million in 2024-2025 to prepare for overseeing, administering, and enforcing the framework. This decision represents a victory for Canadian banks, which opposed the introduction of a new regulator akin to that in the UK.
Additionally, C$4.1 million over three years has been allocated to the Department of Finance to finalize the necessary policy work for establishing and maintaining consumer-driven banking oversight, including national security measures.
However, a specific launch date for the framework has yet to be announced. The fintech sector in Canada has expressed growing impatience with the government’s progress. Last year, two separate organizations initiated campaigns urging the government to expedite the legislation process, emphasizing concerns that Canada risks falling behind in the open banking movement.