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The Canadian government has announced plans to introduce open banking legislation by the end of this year, with the Financial Consumer Agency of Canada (FCAC) set to regulate the new framework.
This development follows a three-year review on the feasibility of adopting a system similar to that of the UK, which would allow easier access for third-party financial service providers to banking data. Although initial commitments aimed for regulation by early 2023, the timeline has shifted, with concrete legislative steps now scheduled for later this year.
The upcoming legislation will establish a comprehensive framework based on six foundational elements: governance, scope, accreditation, common rules, national security, and technical standards.
In preparation for its new regulatory role, the FCAC will receive C$1 million in the 2024-2025 fiscal year to support its capacity to oversee, administer, and enforce the new system. This approach aligns with the preferences of Canadian banks, which have advocated against the creation of a new regulatory body, akin to the UK model.
Additionally, the Department of Finance is allocated C$4.1 million over the next three years to finalize the policy work required to establish and maintain the oversight entity and framework, which includes implementing a national security regime.
Despite these steps forward, the government has not specified a definitive date for when the open banking framework will be fully operational.
The delay in legislation has been a point of contention within Canada’s fintech sector, leading to increased calls from industry groups for the government to expedite the process and prevent Canada from falling behind its international counterparts in financial innovation.
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