The Financial Consumer Agency of Canada (FCAC) will oversee open banking in Canada, receiving $1 million in funding to support its expanded mandate, the Liberal government announced in the 2024 budget.

The Liberals plan to introduce legislation expanding FCAC’s mandate this spring and will provide the Department of Finance with $4.1 million over three years to develop a policy framework for what the government calls “consumer-driven banking.” The budget stopped short, though, of setting a target launch date for the highly anticipated and long delayed set of rules, which would allow people to securely share their financial data with approved third parties such as fintech apps and loan providers.

FCAC, which supervises federally regulated financial institutions with a focus on consumer rights, was industry group Fintechs Canada’s second choice to oversee the system. In a letter to the finance department sent in January, executive director Alex Vronces said the creation of a new entity “would be ideal, but it would also be impractical.”

FCAC’s existing mandate and enforcement tools make it an appropriate choice if a purpose-built oversight body can’t be up and running by 2025, Vronces said in the letter. That’s the year Finance Canada has said it aims to launch the first stage of open banking. Fellow industry lobbying groups the Electronic Transactions Association and the Financial Data and Technology Association also urged the government in pre-budget submissions to, respectively, “move quickly” and “rapidly implement” the framework.

Along with expanding FCAC’s mandate, the federal government plans to detail the technical standard for open banking in legislation this spring. Ottawa will introduce a second piece of legislation in the fall that will cover any outstanding areas, according to a budget backgrounder.

Open banking would require financial institutions to provide data on chequing and savings account activity, credit cards, mortgages and other financial products in a secure, standardized form at a customer’s request. Third parties could then use that data to provide new services—such as budgeting apps and bookkeeping software—or make decisions about whether or not to provide loans based on non-traditional factors, such as a history of timely rent payments.

Popular fintech software providers, such as Borrowell’s Rent Advantage and the accounting platform Quickbooks, already use consumers’ financial data to provide these services, but the government is concerned about the way they obtain it. Currently, customers must provide the company with their online banking login information, which often violates their banks’ terms of service and leaves them vulnerable to hacks and fraud.

Canada’s Big Six banks have expressed concerns about open banking, warning among other things of threats to the country’s financial stability. In a 2022 FCAC survey, Canadians also expressed hesitation about privacy and security of their data.

Open banking, however, is already available in Australia and the U.K. The U.S. is developing its own version, which the federal government plans to make interoperable with Canada’s.

The budget announced other measures intended to reduce the cost of financial services. The federal Liberals introduced a $10 cap on fees banks charge customers who overdraw their accounts, and said FCAC is in talks with banks about expanding eligibility for free and low-cost chequing accounts with more transactions. The budget also announced an enhanced crackdown on high-interest loans, pledging to make it a criminal offence to charge rates higher than 35 per cent.