Recommendations
RECOMMENDATION 1
That the Minister of Finance, through a written direction as set out in section 5.1 of the Financial Consumer Agency of Canada Act, immediately designate the Financial Consumer Agency of Canada the interim oversight body for screen scraping and open banking activities within the federal jurisdiction. As the interim oversight body, the FCAC would be responsible for:
- conducting ongoing research on the benefits and risks for consumers of screen scraping and open banking activities and informing the public of that research on a periodic basis;
- organizing the federal government’s public advertising campaign, in cooperation with fintech companies and banks, to educate consumers about screen scraping, which would include advertisements on government websites, social media, television, print media and public advertising spaces;
- responding to complaints and questions from the public with respect to screen scraping and open banking activities; and
- coordinating its efforts with respect to the oversight of screen scraping and open banking activities with the relevant provincial and territorial consumer protection regulatory authorities.
The FCAC’s role as interim oversight body should be reviewed by the federal government by the end of 2019 and every six months thereafter until a final regulator has been identified.
RECOMMENDATION 2
That the federal government provide immediate funding to consumer protection advocacy groups to assist them in conducting and publicizing research on the benefits and risks of screen scraping and open banking activities for consumers.
RECOMMENDATION 3
That the federal government, in order to urgently advance an open banking framework in Canada, facilitate the development by industry stakeholders of a principles-based, industry-led open banking framework that would be integrated with existing financial sector and privacy legislation. It should also assist with the development of industry-led codes of practice. The framework would identify:
- the scope of data that would be accessible by financial services providers;
- how the payments sector will be included within the framework;
- timelines for implementation; and
- the financial services providers that would be participants. Industry stakeholders include representatives from federally and provincially regulated financial institutions, financial services providers, consumer advocacy groups, Payments Canada and any other relevant groups.
It should also ensure that the Canadian Data Governance Standardization Collaborative prioritizes the development of open banking application programming interface standards that are technology- agnostic.
RECOMMENDATION 4
That the federal government swiftly enact changes to modernize the Personal Information Protection and Electronic Documents Act and align it with global privacy standards. These amendments must prioritize consumer protection and be implemented for the benefit of consumers and small businesses. These changes must include a consumer data portability right.
RECOMMENDATION 5
That the federal government, in consultation with provincial and territorial securities regulators, create a registry of accredited third-party providers for the open banking framework and establish an innovation sandbox to allow new third-party providers to safely test and develop open banking technology that meet any relevant open banking standards.
RECOMMENDATION 6
That the federal government introduce any relevant legislative changes to financial sector legislation when implementing an open banking framework to confirm the prohibition of the use of consumer banking data for insurance underwriting purposes, ensure continued stability of the financial sector and provide any necessary bank-specific consumer protection measures.
RECOMMENDATION 7
That the federal government, in developing an open banking framework, ensure that it is coordinated with the priorities and timelines of the payments industry modernization efforts.
RECOMMENDATION 8
That the federal government, provinces and territories work together to modernize and harmonize their respective laws and standards in order that an open banking framework be inclusive and enable the participation of credit unions, caisses populaires and other provincially and territorially regulated financial institutions.
RECOMMENDATION 9
That the federal government, in order to obtain the benefits of open banking, immediately expediate its efforts to expand robust internet broadband accessibility and capacity to remote, rural and northern communities.
RECOMMENDATION 10
That the federal government make the necessary legislative changes, after consultation with the provinces and territories, to designate the Privacy Commissioner of Canada and the Canadian Commissioner of Competition as the co-regulatory and enforcement authorities for open data frameworks. The Privacy Commissioner would be responsible for responding to privacy complaints and noncompliance with PIPEDA in relation to the open data-related activities, while the Commissioner of Competition would ensure that any open data framework meets the objectives of having increasing competition in a particular industry and that established businesses are not dominating a market that has open-data related activities.
Ottawa – Canadians have little control over their personal financial data and many use third-party banking apps that place them at greater risk of identity theft and fraud.
The federal government must give Canadians the means to share their financial data safely and securely by facilitating what’s called open banking, the Senate Committee on Banking, Trade and Commerce said in a report released Wednesday.
The report describes the phenomenon of open banking and makes recommendations to the federal government regarding how to bring about reforms that are in the interest of Canadian consumers and financial service providers.
Open banking — a concept that one witness suggested would be more accurately called “consumer-directed banking” — has two elements: providing consumers with the ability to direct banks to share selected financial data with other businesses, and to provide additional ways for customers to make payments from their bank accounts.
The rapid adoption of new banking technology underscores the urgency of acting on the committee’s recommendations.
Almost 4 million Canadians have financial services apps that use “screen scraping” to access their banking information. The user generally provides the app with banking login credentials, which the app then uses to extract customer data. While this is convenient, customers have no control over the scope or duration of the app’s access to their data and they have no control over how that data is used. Providing login credentials to a third party may also violate the terms and conditions of the customer’s account with their financial institution.
Alternatives exist that provide these services to consumers while mitigating risk. The federal government has a responsibility to protect Canadians’ privacy. To accomplish this objective, some committee recommendations have been crafted so that they do not require legislation to implement them. They are achievable now. And they are urgently needed. Canadians’ most intimate financial information is at risk.
Quick Facts
- Actions that the federal government can and should take now include:
- Designating the Financial Consumer Agency of Canada as the interim oversight body for screen scraping and open banking activities with a mandate to conduct research and public education, and to respond to complaints.
- Providing immediate funding to consumer protection groups to help them conduct and publicize research on the benefits and risks of screen scraping and open banking activities.
- Actions that the federal government should pursue over the longer term include:
- Facilitating the development of an open banking framework, in collaboration with industry stakeholders.
- Modernizing the Personal Information Protection and Electronic Documents Act to align it with global privacy standards. The changes must include a consumer right to direct that their personal financial information be shared with another organization.
Quotes
“Canadians are eager to embrace technology that makes their lives easier. Open banking is no exception. The federal government has a responsibility to create an environment in which the use of this technology is truly in consumers’ interests.”
- Senator Doug Black, QC, Chair of the committee
“Our banking information reveals a lot about ourselves. It is a trove of personal data. Canadians deserve to have control over who has access to that information. Our report clearly shows what the government must do to keep Canadians’ personal information safe.”
- Senator Carolyn Stewart Olsen, Deputy Chair of the committee
Associated Links
- Read the report: Open Banking: What it Means for You.
- Follow the committee on social media using the hashtag #BANC.
- Sign up for the Senate eNewsletter.
For more information:
Sonia Noreau
Public Relations Officer | Senate of Canada
613-614-1180 | sonia.noreau@sen.parl.gc.ca
Senators who participated in this study
Douglas Black
CSG - Alberta
Carolyn Stewart Olsen
C - New Brunswick
Daniel Lang
C - Yukon
Joseph A. Day
Non-affiliated - New Brunswick (Saint John-Kennebecasis)
Colin Deacon
CSG - Nova Scotia
Linda Frum
C - Ontario
Marty Klyne
PSG - Saskatchewan
Sandra M. Lovelace Nicholas
PSG - New Brunswick
Elizabeth Marshall
C - Newfoundland and Labrador
Pierrette Ringuette
ISG - New Brunswick
David Tkachuk
C - Saskatchewan
Josée Verner, P.C.
CSG - Quebec (Montarville)
Pamela Wallin
CSG - Saskatchewan
Howard Wetston
ISG - Ontario
Ex-officio members of the committee: The Honourable Senators Peter Harder, P.C., Diane Bellemare, Grant Mitchell, Larry W. Smith, Yonah Martin, Joseph A. Day, Terry M. Mercer, Yuen Pau Woo and Raymonde Saint-Germain.
Other senators who have participated in the study: The Honourable Senators Bev Busson, Larry W. Campbell, Michael Duffy, Pat Duncan, Diane F. Griffin and Lucie Moncion.