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The European Central Bank (ECB) has shared concerns about elements of the EU’s Financial Data Access Regulation (FIDA), which will pave the way for data sharing beyond payments in the trading bloc.
In an opinion published last week (September 3), the ECB acknowledged that FIDA “is an important component of the European strategy for data”, but raised what it believes are critical issues regarding the regulation’s impact on its own supervisory role.
The regulation, proposed by the European Commission in June 2023, is designed to facilitate easier access to customer financial data beyond payment accounts, giving individuals and businesses the ability to authorise the sharing of data such as mortgage agreements, loans and creditworthiness assessments.
Although the ECB welcomes these advancements, it is concerned that the proposed regulation assigns it tasks outside its core legal competencies.
For example, the central bank is responsible for prudential supervision, which focuses on the safety and soundness of credit institutions, but the new regulation introduces elements of consumer protection, particularly in overseeing how customer data is accessed and shared.
The ECB believes these tasks fall within the remit of national authorities, as consumer protection is distinct from prudential supervision.
The ECB’s opinion also points out that under Article 127(6) of the Treaty on the Functioning of the European Union (TFEU), its role is limited to overseeing risks to the financial system rather than directly managing consumer data.
It argues that the European Commission's proposal does not sufficiently differentiate between these responsibilities, creating the risk that the ECB could be tasked with functions for which it is not legally mandated.
The ECB has recommended several amendments to the proposed regulation to address these concerns, suggesting that the regulation be modified to explicitly state that it will not be responsible for consumer protection tasks.
It also suggests changes to several articles of the proposal, including Article 17, which currently lists the ECB as one of the competent authorities.
The bank argues that its role should be confined strictly to prudential supervision of credit institutions.
A list of objections
Another issue the ECB raised concerns the sharing of specific types of financial data.
The regulation currently obligates institutions to share data on loans, mortgage agreements and creditworthiness.
However, the ECB insists that data gathered under its own AnaCredit Regulation, which provides for the collection of detailed, harmonised information on individual bank loans across the euro area, should be exempt from further sharing under this framework.
The AnaCredit project, initiated in 2011 with data collection starting in September 2018, is used exclusively for managing credit risk.
In its opinion, the ECB says it fears that allowing such data to be shared would conflict with existing rules that protect its confidentiality.
The central bank also recommends revisions to the parts of the regulation dealing with consolidated supervision.
Under the current proposal, the ECB would be involved in inspecting data-sharing practices at financial institutions.
The ECB suggests that, although it should be notified of such inspections, it should not be directly involved unless the task relates to its prudential supervisory role.
Collaboration is key
Despite its objections, the central bank is also conciliatory about the need for collaboration, and suggests a clear legal basis for the exchange of information between it and national authorities responsible for consumer protection.
This, it argues, would help ensure smooth oversight of the regulation’s implementation without overstepping its supervisory boundaries.
So far, FIDA has made limited progress, especially in comparison with the EU’s Payment Services Package, a negotiating position for which was voted through by the European Parliament before the elections in early June.
FIDA, in contrast, made it only as far as a position being established by the European Parliament’s Economic and Monetary Affairs (ECON) committee.
The rapporteur for the regulation, Michiel Hoogeveen, lost his seat at the election, meaning that a new representative on the ECON committee will need to be assigned.
