Canadian Conservatives Propose Open Banking Law

November 13, 2023
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Conservative lawmakers in Canada have introduced a bill to move ahead with the implementation of open banking, accusing the government of "dragging their feet".

Conservative lawmakers in Canada have introduced a bill to move ahead with the implementation of open banking, accusing the government of "dragging their feet".

Last Thursday (November 9), Conservative shadow minister for pan-Canadian trade and competition Ryan Williams introduced the Consumer-led Banking Act in parliament.

The act requires the finance minister, currently Chrystia Freeland, to submit a plan for the implementation of open banking in Canada within 30 days of the act becoming law.

Should the minister fail to do so, she must report to lawmakers the reasons for the delay and submit an expected timeline for when she could do so.

“After eight years of Justin Trudeau, Canadians are paying some of the highest banking fees in the world. And instead of fighting to keep more money in your pocket, this Liberal Government is doubling down and protecting the big banks by stalling on legislation that would bring home real savings for Canadians,” said Williams.

The announcement noted that, in the UK, as a result of the government’s intervention in open banking, the top nine big banks offer checking accounts for free. Meanwhile, the big five banks in Canada charge more than $10 each for those accounts.

Government is moving too slowly

As reported by Vixio, open banking, or customer-led banking as the legislators call it, was first mentioned by the Canadian government in the 2018 federal budget when it said it would undertake a review of the merits of the concept that is gaining traction in many parts of the world.

In 2021, a government committee on open banking delivered its final report, which included a comprehensive plan for implementing open banking and suggested the appointment of an open banking “lead” who handles the engagement with stakeholders and the implementation.

At that point, the government had plans to kick off the first phase of open banking by January 2023. 

In March 2022, Abraham Tachjian was appointed as open banking lead. His mandate was due to expire at the end of September but was suddenly prolonged until the end of the year.

In the absence of a regulatory framework, financial data sharing in Canada is currently governed by bilateral data access agreements between banks and fintechs, which leaves room for the latter to negotiate good terms and conditions with banks.

As the end of Tachjian’s mandate was approaching in September, the fintech industry had grown wary that the implementation of open banking stalled.

In early October, Vixio reported that trade body Fintechs Canada launched a campaign to raise awareness of open banking and encourage the government to push ahead with the implementation.

Now, the Conservatives say “the Liberal Government has refused to stand up to the big banks and deliver for Canadians” as even the open banking lead acknowledged that “Canada is at risk of being the last G7 country without customer-led banking”.

According to the release, six large banks control 93 percent of all assets in Canada, “competition has decreased over the past eight years while banks’ profits and markups rose”. 

Conservative leader Pierre Poilievre added that the bill would force Prime Minister Justin Trudeau to implement the plan “that’s now 11 months late, after sitting on their hands for more than two years”.

“This government is dragging their feet,” said Poilievre, who served as a member of the Canadian parliament for seven terms, was the leader of the Conservative Party of Canada and has been Leader of His Majesty's Official Opposition since September 2022.

He describes himself as “a life-long conservative, champion of a free market” and is running for Prime Minister in Canada’s next elections. According to an Ipsos survey, in September 2023, 40 percent of Canadians supported Poilievre as Prime Minister against 31 percent for Trudeau.

Poilievre has previously said that if he is elected as Prime Minister he would ban the country’s central bank from creating a central bank digital currency.

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