On December 16, 2024, the Government of Canada released its 2024 Fall Economic Statement (the
“Economic Statement“), which establishes
the remaining pieces of Canada’s proposed consumer-driven
banking framework (the “Proposed
Framework“). We have previously written about the 2023 Fall Economic Statement and the federal
government’s intent to introduce open banking legislation,
which set the stage for the Proposed Framework. The
government’s Policy Statement on Consumer-Driven Banking,
released concurrently with the 2023 Fall Economic Statement,
highlighted core elements of the Proposed Framework. While the 2023
Fall Economic Statement touched on some of these elements, the
recently published Economic Statement signals the government’s
commitment to establishing and implementing legislation for the
remaining elements of the Proposed Framework. Established rules,
guidelines and standards for the Proposed Framework will ensure
that individuals can safely and securely share and access their
financial data, resulting in better financial outcomes for many
Canadians.
Core Elements of the Proposed Framework
The Economic Statement focuses on the core elements of the
Proposed Framework: governance, scope, accreditation, common rules,
national security and technical standards.
Governance
The Proposed Framework’s governance model is intended to
ensure that participants will comply with common rules and that
clear roles and responsibilities will be established. In support of
this, the Financial Consumer Agency of Canada
(“FCAC“) was granted a mandate that
includes oversight, administration, and enforcement of the Proposed
Framework, while the Department of Finance will continue to develop
policies, legislation and regulations. Every participant will be
subject to the Framework and supervision by the FCAC, and
legislation will establish a permanent federal, provincial and
territorial advisory committee to advise the Senior Deputy
Commissioner of FCAC on administering and implementing the Proposed
Framework. This creates consistent standards throughout Canada,
ensuring that all Canadians are equally protected.
Scope
The federal government will adopt a phased-in approach to the
scope of the Proposed Framework, which refers to participants,
breadth of data sharing, and functionality. The initial phase will
require participation from banks that have the specified level of
retail volume, while other federally-regulated financial
institutions, credit unions and accredited third parties can choose
to opt-in. Participants will also be required, at the request of
the consumer, to share data related to chequing and savings account
operations, investment products, and lending products, including
credit cards, lines of credit, and mortgages, subject to certain
exclusions. In terms of functionality, all entities must comply
with consumer-permissioned requests to share data. All entities
must provide reciprocal access in order to enter and continue to
participate in the Proposed Framework.
Accreditation
Entities wishing to participate in the Proposed Framework must
undergo a formal accreditation process, which ensures that only
trusted and legitimate parties have access to consumers’
financial data. Entities will be required to apply to the FCAC and
provide details about their organization, operational standards,
and financial capacity. Accredited participants will be allowed to
request financial data from another participant upon the
consumer’s instruction, and will be subjected to common rules
of the Proposed Framework. All entities will adhere to the same
accreditation standards, ensuring a consistent approach before
exploring more tailored options.
Common Rules
The Proposed Framework will establish common rules addressing
privacy, liability, security, national security and integrity
obligations, which aim to complement existing legislation rather
than be duplicative or conflicting. All participants must comply
with the common rules in order to access consumer data.
National Security
The Proposed Framework will include safeguards to protect the
integrity and security of Canadians’ confidence in the
financial sector, which will also align with existing legislation
affecting the financial sector, such as the Retail Payment
Activities Act, the Bank Act and the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act. The Minister of Finance
will have the authority to refuse, suspend, or revoke access to the
Proposed Framework on the basis of national security reasons.
Technical Standards
A key objective of the Proposed Framework is to ensure secure
data sharing through the use of APIs, a software that allows
products and services to communicate with each other. The Proposed
Framework will set a technical standard that will establish the
specifications to which APIs are built, which will in turn enhance
functionality and interoperability.
What’s Next?
The Proposed Framework aims to establish a collaborative and
efficient regulatory approach, balancing national consistency with
regional flexibility. Once implemented, with the support of an
advisory committee guiding the FCAC’s Senior Deputy
Commissioner, provincial and territorial regulators will oversee
specific provisions of the Proposed Framework. Once the Proposed
Framework is implemented, FCAC oversight will operate on a
cost-recovery model, with all participants subject to its
supervision. This approach ensures consistent protections, fair
rules, and provincial flexibility while fostering a unified,
well-coordinated regulatory system.
Final Thoughts
The Economic Statement signals Canada’s commitment to
implementing a consumer-driven banking framework by setting
parameters for the core elements of the Proposed Framework. The
Department of Finance is now mandated to begin developing the
regulations, while engaging with stakeholders and the public as
necessary. Meanwhile, the FCAC will continue preparing for
implementation of the Proposed Framework through engaging with
participants in the industry. However, while the federal government
aims to launch the Proposed Framework in early 2026, much work
still needs to be done to introduce legislation that reflects its
core elements.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
© McMillan LLP 2024
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