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Canada set for open banking legislation

Canada set for open banking legislation

The Canadian government has promised open banking legislation by the end of the year and confirmed that the Financial Consumer Agency of Canada (FCAC) will oversee the new system.

Following a three year investigation into whether the country should follow the UK in making it easier for people to let third party financial services providers access their banking data, the government has been inching towards the creation of an open banking framework.

Having initially promised to enact regulation by the beginning of 2023, the government has now used the federal budget to say it will introduce two pieces of legislation this year for open, or "consumer-driven", banking.

The legislation will involve six core framework elements: governance; scope; accreditation; common rules; national security; and technical standard.

Governance is being handed over to FCAC, which will get C$1 million in 2024-2025 to prepare it to oversee, administer and enforce the framework. The move is a win for Canada's banks, which had been against the possibility of following the UK in introducing a new regulator.

Another C$4.1 million over three years has been earmarked for the Department of Finance to complete policy work necessary to establish and maintain a consumer-driven banking oversight entity and framework, including the implementation of a national security regime.

However, a target date for when the framework will kick in has not been given.

Canada's fintech sector has been growing impatient with the government over the process. Late last year, two separate groups launched campaigns calling for action to introduce legislation, warning that the country was being left behind.

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