Canadian government provides clarity on Open Banking framework in Budget 2024

The Canadian government intends to introduce legislation that establishes the “foundational elements” of an Open Banking Framework this Spring, and has promised “interoperability with the coming American framework” overseen by the US Consumer Financial Protection Bureau (CFPB).

In Budget 2024, Deputy Prime Minister and Minister of Finance Chrystia Freeland announced that the legislation will expand the mandate of the Financial Consumer Agency of Canada (FCAC) to include oversight, administration and enforcement of consumer-driven banking.

The FCAC has been tasked with establishing foundational framework elements related to scope, system participation, safeguards “in respect of integrity and national security”, and common rules covering privacy, liability, and security.

The legislation coming into force this Spring is the first of two pieces of legislation to implement the country’s Open Banking Framework, starting with governance, scope, and criteria and process for the technical standard.

Steve Boms, executive director at FDATA North America, told Open Banking Expo: “The Canadian government has, after six years, finally provided details regarding its Open Finance framework, and a commitment to begin legislating it into existence beginning this Spring – sooner than the government had indicated just last Fall.”

The remaining elements of the framework will be legislated in Fall 2024.

The scope of data that participants will be required to share at the request of a consumer will initially include data related to chequing and savings accounts operations, investment products available through their online portals, and lending products, such as credit cards, lines of credit, and mortgages.

Boms added that this will include more accounts than currently being proposed by the CFPB in the US.

The Department of Finance revealed that Canada’s Open Banking Framework will include the principles and process for the selection of a single technical standard for data sharing “that will ensure the standard is fair, open, and accessible” and, moreover, interoperable with the CFPB’s Personal Financial Data Rights rule.

In Budget 2024, the government also announced the creation of a Senior Deputy Commissioner of Consumer-Driven Banking at the FCAC, who will be responsible for fulfilling the organisation’s consumer-driven banking mandate.

The government has pledged to review Canada’s ‘Consumer-Driven Banking Framework’ after three years, to ensure it is still delivering on its objectives and continues to meet the needs of Canadians.

Minister Freeland said in a statement: “Budget 2024 renews our focus on unlocking the door to the middle class for millions of younger Canadians. We’ll build more housing and help make life cost less.

“We will drive our economy toward growth that lifts everyone up. That is fairness for every generation.”

In the Fall Economic Statement delivered in November 2023, Minister Freeland outlined her intention to deliver Open Banking, following mounting pressure from industry groups and the opposition party.

Then, in March this year, the House of Commons voted to pass a second reading of Conservative MP Ryan Williams’ Bill C-365, which will accelerate the implementation of a consumer-led banking system for Canadians.