North America

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FDATA North America Statement On The CFPB Proposed Rule Implementing Section 1033

October 19, 2023, Washington, DC – The Financial Data and Technology Association of North America (FDATA), a trade association representing three dozen financial technology and open finance companies, today celebrated the release of the Consumer Financial Protection Bureau’s proposed rule implementing Section 1033 of the Dodd-Frank Act.

Steve Boms, Executive Director of FDATA, released the following statement:

“Today, we’re celebrating a moment that our members – and millions of consumers across the country – have been waiting for: the CFPB’s release of its proposed rule creating a legally binding consumer financial data right. We strongly support the proposed rule, which will put consumers in full control of their financial data and empower them to choose the financial provider best suited to meet their unique needs. The proposed rule will create more competition and choice in the financial services marketplace, ultimately leading to better consumer outcomes.

We are also pleased that the proposed rule creates strong data security and privacy standards to ensure that consumers are protected wherever they choose to manage their finances.

The long-awaited rulemaking commenced with the issuance of the CFPB’s Request for Information regarding Section 1033 of the Dodd-Frank Act in 2016. While the need for this rule was clear then, with hundreds of millions of consumers now relying on digital financial tools, it is imperative today. We look forward to working with the CFPB as it seeks to finalize this rule next year and bring U.S. consumer financial data rights on par with many other nations across the globe.”

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Coalition of leading industry stakeholders voice continued support for vital Canadian Payments Act amendments

OTTAWA, October 11, 2023 — The Fall Economic Statement presents an opportunity to modernize the Canadian Payments Act to strengthen financial competition, innovation, consumer protection and economic stability.

Leaders across Canada’s payment industry continue to demonstrate unified support for amendments to the Canadian Payments Act to expand Payments Canada’s membership. This support was previously expressed through various pre-budget consultation submissions, a joint letter to the Minister of Finance and a 2018 Department of Finance consultation.

Expanded membership eligibility is essential to broaden safe access and participation on Payments Canada’s infrastructure. By broadening access to include payment service providers, credit union locals, and operators of financial market infrastructures that meet regulatory and legislative requirements, the Government of Canada will foster competition and innovation and help ensure the future of digital payments happens within — and not outside — the regulatory system.

“Payments are changing at an unprecedented rate,” said Tracey Black, President and Chief Executive Officer of Payments Canada. “Canada must evolve its payment systems and supporting legislation in parallel to deliver continued financial stability, to support increased competition and innovation and to ensure Canada remains globally competitive.”

“Payments Canada, and the regulatory framework that underpins the organization, has a long, proven history of serving Canadians’ best interests by getting money to where it needs to be, safely,” said Garry Foster, Chair of the Board of Directors of Payments Canada. “But the world is changing. Payments are changing. And innovation is happening no matter what. If we want to continue to serve Canadians in a way that reflects the level of safety and security expected from Canada’s financial system, we need to modernize the Canadian Payments Act.”

Currently, Payments Canada membership is limited to banks, credit union centrals, and select other financial institution types, including securities dealers. Membership is required to access Payments Canada’s infrastructure as a participant. Proposed changes to the Canadian Payments Act would expand membership eligibility to include payment service providers registered with the Bank of Canada, provincially regulated credit unions, and operators of financial market infrastructures designated by the Bank of Canada. To gain access to the payment systems, a Payments Canada member must meet the risk-based access and participation requirements set out in Payments Canada’s by-laws, rules and standards.

Contributed quotes

“As new technology and services continue to transform the way payments are made and processed, amending and broadening access to the Canadian Payments Act can help modernize Canada’s payment landscape. Allowing for a more diverse group of financial service providers can ensure the path is open for innovation and encourage the development of new user-friendly, accessible and cost-efficient payment solutions for small businesses. It can also foster competition within the industry, which can drive costs down and improve financial services.”
Dan Kelly, President and Chief Executive Officer
Canadian Federation of Independent Business (CFIB)

“The most important benefits we can offer Canadian consumers are greater choice and competition within the context of a safe and well-regulated payment system. A measured approach to broadening access to Payments Canada membership, which includes effective rules and robust consumer protection, can help to create a more innovative and competitive marketplace that is good for everyone.”
Elizabeth Mulholland
Prosper Canada

“Canada has a strong record of payment innovation. At the same time, we know we must continue to update policy and regulatory frameworks to ensure they meet the needs of Canadians and support growth and competitiveness in the market. Interac supports updating the Canadian Payments Act to enable broadened participation in national payments infrastructure and will continue to work with industry stakeholders to advance opportunities for increased access on our network and products.”
Kirkland Morris, VP Enterprise Initiatives & External Affairs
Interac

“Making the financial sector work harder for its customers is a necessary part of solving Canada’s affordability crisis. Expanding access to payment systems would promote responsible competition in the financial sector, letting Canadian consumers and businesses keep more of their hard-earned money in their pockets.”
Alex Vronces, Executive Director
Fintechs Canada

“Expanding membership to Payments Canada will allow fintechs to serve on the front lines of bringing the benefits of faster payments to consumers, merchants and the economy.”
Scott Talbott, SVP, Government Affairs
Electronic Transactions Association (ETA)  

“The payment fintech industry in Canada has made commendable strides in introducing new and innovative concepts. However, there are still some elements hindering the overall progress of the sector. The lack of representation and access to these fintechs in Payments Canada’s membership is presenting certain obstacles in the discussions surrounding crucial policies and infrastructure. To overcome these hurdles, we firmly believe that expanding membership criteria is necessary. This will enable innovative fintechs to offer Canadians superior products and services, foster healthy competition, and promote innovation. Ultimately, this will help Canada remain competitive in the global fintech landscape. At Fintech Cadence, we wholeheartedly support the idea of extending membership eligibility to Payment Canada’s membership.”
Layial El-Hadi, Executive Director
Fintech Cadence

“Canada must act now to modernize payments. The amendments to the Canadian Payments Act are long overdue and necessary to enable non-bank access to the payment system. Allowing a broader group of financial service providers like Wise to become members of Payments Canada will lower payment costs while increasing speed, competition, innovation, and consumer adoption. Payment modernization will allow Canada to go from a global fintech laggard to a leader.”
Nick Catino, Global Head of Policy & Social Impact
Wise

“It is evident that the most significant innovations in payment services within Canada have been pioneered by organizations that, unfortunately, do not qualify for membership within Payments Canada. This exclusion has placed payment service providers (PSPs), such as Telpay, and their valued customers, in a highly disadvantageous position. The inability to participate in the Payments Canada network has stifled competition and hindered progress within our industry. This has resulted in a glaring disparity in access to essential payment infrastructure, directly impacting the ability of PSPs  to offer reliable and flexible solutions to their clients. We firmly believe that broadening access to these systems is not only a matter of fairness but also of economic necessity. It is our assertion that providing greater access will not only empower PSPs but also benefit end-users — both payors and payees. A more inclusive approach to payment systems will foster innovation, enhance competition, and drive the demand for more reliable and flexible payment solutions.”
John Zajic, Vice President, Corporate Policy & Compliance
Telpay

“Implementation of open banking and amendments to the Canadian Payments Act that allow a broader set of stakeholders to safely and securely gain access to Canada’s payment systems will facilitate a consumer-centric 21st century financial services marketplace. The Fall Economic Statement provides a unique opportunity to meaningfully advance both of these important initiatives and to promote innovation, competition, and a more inclusive Canadian financial services system.”
Steve Boms, Executive Director
Financial Data and Technology Association of North America

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FDATA North America Responds to CFPB Data Broker SBREFA Memo

September 21, 2023, Washington, DC – Steve Boms, the Executive Director of the Financial Data and Technology Association of North America, a consortium of financial technology companies united behind the notion that consumers and small businesses should have full control over their financial data, today released the following statement in response to the Consumer Financial Protection Bureau’s (CFPB) outline of proposals and alternatives under consideration by the agency ahead of its “data broker” rulemaking:

 “We welcome the CFPB’s close scrutiny of companies that collect and sell consumers’ data, often unbeknownst to the consumer, and use that data for marketing and advertising purposes.

At the same time, we are concerned that the CFPB did not distinguish in this outline between entities that collect consumer information without consumers’ informed consent and third-party providers of financial products and tools that access consumers’ data at their express direction and consistent with the CFPB’s forthcoming Section 1033 Open Banking rule. 

Entities that enable consumers to access and share their own personal financial information – at consumers’ express direction – are at the heart of open banking and empower consumer choice and control, and improve consumers’ ability to manage their financial lives. These companies should be appropriately regulated under Section 1033, including adhering to the privacy principles FDATA North America members released in March of this year.

The same principles that led to the enactment of the Fair Credit Reporting Act in 1970 – transparency and control for consumers over their financial data – are the hallmarks of customer-permissioned data access marketplace today. Accordingly, as it contemplates a proposed rule in this space, we encourage the CFPB in the strongest possible terms to distinguish between “data brokers” and third-party financial providers that access consumer data based on a consumer’s affirmative request to do so.”

FDATA North America previously responded to the CFPB’s Request for Information (RFI) Regarding Data Brokers and Other Business Practices Involving the Collection and Sale of Consumer Information, submitting a comment letter in June stressing in the strongest possible terms, that third-party providers of financial services that rely on consumer-permissioned data are not data brokers, and therefore should be exempt from any Bureau rulemakings, guidance, or other actions it may consider in the data brokerage space.

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FDATA North America Submits Comments to Canada’s Standing Committee on Finance Pre-2024 Budget Consultations

August 3, 2023, Washington, DC – The Financial Data and Technology Association (FDATA) of North America submitted comments to Canada’s Standing Committee on Finance (FINA) as part of its pre-budget consultations in advance of the 2024 budget. Our submission stressed that Canada needs to remain diligent in its pursuit of an open banking framework which will provide Canadians much needed relief in banking fees and other expenses, that Canada must recognize that other countries are rapidly implementing their own open banking regimes, and remain keenly aware that every day that passes without open banking development risks leaving Canadians further behind their international counterparts and competitors.

Our letter also expressed disappointment with the lack of progress on the open banking file, and called on the government to:

  • Include language in Budget 2024 to implement the recommendations that Open Banking Lead Abraham Tachjian will provide in his forthcoming final report and rapidly implement Canada’s open banking system, including funding for the development of a neutral, transparent, and nimble governance function;
  • Include language in Budget 2024 outlining the government’s approach to open finance, the next logical step after open banking, and the framework needed to truly unlock market innovation and competition to benefit Canadian consumers and businesses; and
  • Amend the Canadian Payments Act to enable Payments Canada to expand its membership to include federally regulated payment service providers, providing access to its forthcoming real-time payment system.

In the submission, we also asserted that any open banking governance entity in Canada must be neutral (i.e. not controlled by any particular stakeholder(s) with commercial interests in the ecosystem), transparent (i.e. it invites and considers stakeholder input and subjects its decisions to an open, publicly visible process), and nimble (i.e. capable of making binding decisions relatively quickly and without undue bureaucracy), with all stakeholders in the open banking system agreeing to comply with the decisions and determinations made by the open banking governance entity as a condition of being active in the market.

A full copy of the submission is available here.

 

 

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FDATA North America Responds to CFPB Data Broker RFI

June 16, 2023, Washington, DC – In response to the Consumer Financial Protection Bureau’s (CFPB) Request for Information (RFI) Regarding Data Brokers and Other Business Practices Involving the Collection and Sale of Consumer Information, FDATA North America submitted comment letter stressing in the strongest possible terms, that third-party providers of financial services that rely on consumer-permissioned data are not data brokers, and therefore should be exempt from any Bureau rulemakings, guidance, or other actions it may consider in the data brokerage space.

We also used this opportunity to further deploy our FDATA Privacy Principles which define customer-directed data as financial data that is collected or shared in accordance with a clear affirmative action by or request from an end user or their authorized agent, rather than data collected passively, such as data that may be collected automatically through pixels or cookies as a consumer navigates through web pages. For data to be considered customer-directed, our principles further assert that the end user must also have full utility over any non-proprietary data element for which a data holder holds about them. And critically, our principles state that the end user must have the ability to opt-out of future use of their data at any time.

Finally, the letter reiterated our long-standing positions that no third party should have access to any financial data element permissioned by a customer that is not required to fuel the use case for which that customer has opted in, and that the CFPB should expand its supervisory authority to cover data aggregators.

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Video Member Spotlight: Portabl

Nate Soffio, Co-Founder and CEO of Portabl describes how Portabl’s technology is simplifying online user identification and reducing friction within the open banking ecosystem:

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FDATA North America Responds to CFPB Release of Section 1033 SBREFA Memo

For Immediate Release: FDATA North America Responds to CFPB Release of Section 1033 SBREFA Memo

Contact: Justin Santopietro; [email protected]

April 4, 2023, Washington, DC – In response to the Consumer Financial Protection Bureau’s (CFPB) recent release of its Section 1033 SBREFA memo, which summarizes the feedback it received from small business representatives (SERs) during the SBREFA panels earlier this year, FDATA North America Executive Director Steve Boms released the following statement:

“The CFPB’s forthcoming Section 1033 rule represents a significant opportunity to create a more competitive and customer-centric financial services marketplace in the United States. We are glad to see that much of the feedback the CFPB has received from the SERs during the SBREFA process mirrors FDATA’s positions, including a general view that the 1033 rule should cover a broader scope of accounts, including mortgages, student loans, auto loans, personal loans, prepaid cards, payroll accounts, public benefits, and more. We are also encouraged by discussion among the SERs of the importance of the CFPB establishing authentication standards to ensure that third parties do not experience any undue restrictions in accessing user-permissioned data, as well as the importance of credential-based screen scraping continuing for some period of time given the general lack of token-based APIs that currently exist in the data provider ecosystem. We also echo the robust feedback the SERs provided to the CFPB that its proposed limitations on secondary data usage could have unforeseen negative implications for research, product improvements, and a range of other use cases, and suggestions that the Bureau more carefully consider any such limitations. We look forward to continuing to work with the CFPB as it prepares to propose a Section 1033 rulemaking later this year.”

FDATA North America and its 30+ member companies have actively collaborated with the CFPB over the past several years as it has worked to implement Section 1033 of the Dodd-Frank Act. Our efforts have included detailed letters in response to the October 2020 Advanced Notice of Proposed Rulemaking (ANPR) and the recent SBREFA Outline of Proposals for Consideration.

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FDATA North America Responds to Release of Canada’s 2023 Budget

March 29, 2023, Washington, DC – – In response to yesterday’s release by the Government of Canada of its 2023 Budget, FDATA North America Executive Director Steve Boms issued the following statement:

“We are disappointed at the lack of progress in Budget 2023 toward the implementation of Canada’s open banking regime, particularly since the timeline set forth in the 2021 Open Banking Advisory Committee report has now passed. Despite this omission, FDATA North America and its over 30 member companies look forward to continued collaboration with the Department of Finance as it seeks to make a new Canadian consumer-centered open banking system a reality in the coming months.”

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FDATA North America Submits Comments on Canadian Competition Act Review

March 28, 2023, Washington, DC – FDATA North America today submitted a letter in response to the Canadian government’s review of the Competition Act. As a trade association representing dozens of some of the most innovative financial technology companies working alongside Canadian consumers and small- and medium-sized enterprises, we support the development of a more competitive marketplace in which consumers and SMEs may choose the provider, tool or service that best fits their unique need. We also used this review submission as another opportunity to urge the Government of Canada to make concrete progress on the development of its open banking regime, particularly since the deadline set forth in the 2021 Advisory Committee Report on Open Banking has now passed.

The letter stressed the important need to update and right-size the Competition Act to reflect today’s current business environment to maintain competition in the market for data-driven financial services, noting that these updates must address situations where certain market participants either individually or collectively override a decision by a consumer or SME to direct a potential competitor to electronically access their financial information. Our letter particularly described how restrictions on customer-directed data sharing that directly inhibit competition must be scrutinized under well-established competition laws as the Department of Finance works to implement an open banking regime for Canada, any stressed that any new legislation or regulations regarding competition in the financial services marketplace should be aligned with the Department’s work on this file.

The letter also identified several provisions of the Competition Act that apply to financial institutions could be more actively used to prevent financial institutions from blocking consumer-permissioned data access to third party financial providers of their choosing, and shared details on how the United Kingdom and Australia developed their open banking regimes to maximize competition and consumer benefit.

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FDATA North America Responds to Canadian Draft RPAA Regulations

March 27, 2023, Washington, DC – FDATA North America today submitted its response to draft regulations from the Bank of Canada and Department of Finance that would implement the Retail Payment Activities Act (RPAA). The letter noted that adoption of these proposed regulations would see as many as 2,500 payment service providers (“PSPs”) overseen under a strong regulatory framework and would, once finalized and implemented, meaningfully advance the modernization of Canada’s financial services marketplace. It also respectfully suggested that the implementation of these regulations should facilitate an expedited inclusion into the scope of Canada’s open banking framework of payment use cases.

The letter strongly supports the objectives of the draft regulations and the underlying Act, but noted the absence of the critical component of end-user education. FDATA therefore suggested that the Bank of Canada and/or the Department of Finance develop an end user education plan to be deployed in concert with the implementation of the draft regulations, and that government work with market stakeholders, including PSPs, in an effort to provide consumers and SMEs with consistent information about the benefits and protections afforded to them under the draft regulations.

FDATA also expressed appreciation for inclusion of a clear timeline within which applications submitted by PSPs would be required to be reviewed by the Bank of Canada and the Department Finance. Since many FDATA members have experienced regulatory delays in application processing in other jurisdictions’ payment modernization and/or open banking frameworks, FDATA welcomes the certainty provided by the regulatory-imposed timelines for consideration of a PSP’s application.

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