The Financial Data Access (FiDA) Regulation, currently under consideration by the European Parliament and Council, represents a significant milestone in the development of Open Finance within the EU/EEA.
Industry leaders weigh in on FiDA
However, industry associations, including the Association for Financial Markets in Europe (AFME), the European Banking Federation (EBF) and the European Fund and Asset Management Association (EFAMA), have voiced concerns about the proposed framework, urging a thorough impact assessment before its finalisation.
These groups emphasise the need for a well-balanced approach that delivers measurable benefits for European citizens while supporting the financial industry’s ability to innovate and remain competitive on the global stage.
Without such an approach, they warn, FiDA could risk undermining both consumer protections and the competitiveness of financial institutions across Europe.
Focused and Evidence-Based Framework
The financial sector stresses that the success of FiDA hinges on a clear and evidence-driven design. The proposed regulation aims to expand access to financial data, but its scope and implications raise several questions.
One critical concern is the lack of a comprehensive cost-benefit analysis.
According to industry leaders, the current impact assessment for FiDA has not adequately considered the financial burden on institutions, nor has it sufficiently demonstrated customer and market demand for broader data sharing.
This lack of evidence risks diverting resources from other critical innovation areas, potentially stifling the very progress FiDA seeks to encourage.
The framework must prioritise demonstrated benefits to consumers and tangible market demand to avoid creating unnecessary burdens on financial institutions.
Striking this balance is key to fostering innovation without jeopardising the stability and competitiveness of the financial ecosystem.
Data Security and Privacy Concerns
Another pressing issue is the regulation’s creation of new entities, known as financial information service providers (FISPs).
These organisations would gain access to vast quantities of sensitive customer data, raising concerns about privacy and security.
Industry leaders argue that FISPs should be subject to the same rigorous regulatory standards as traditional financial institutions to ensure a consistent and secure data-sharing environment.
The current design of FiDA, they caution, does not adequately address these concerns.
Without robust regulation and supervision, there is a significant risk to data protection – a fundamental right for EU citizens – and to the security of European companies’ information.
Recommendations for a Better FiDA Framework
To address these challenges, financial industry representatives propose several key recommendations:
- Balanced Value Proposition: FiDA must align customer benefits, market demand, and institutional costs. Any implementation should be backed by strong evidence of its advantages for consumers and businesses.
- Stronger Data Protection Measures: FISPs should face the same regulatory and supervisory standards as other financial institutions. Additionally, data-sharing protocols must ensure the highest levels of security and privacy protection.
- Legal Clarity and Focus: The broad scope of the current FiDA proposal, particularly regarding the categories of data included, needs refinement. Narrowing its focus will help mitigate risks to competitiveness and consumer protection.
Industry Commitment to Open Finance
Despite these concerns, the financial sector remains committed to fostering Open Finance in the EU/EEA.
Leaders across the industry have expressed their willingness to collaborate with regulators to refine FiDA into a framework that promotes innovation while safeguarding the rights and interests of all stakeholders.
The European financial ecosystem stands at a pivotal moment. By addressing these concerns and incorporating industry recommendations, FiDA can become a robust, impactful regulation that balances innovation with responsibility, ensuring long-term benefits for consumers, businesses and the economy.
The post Industry leaders weigh in on the FiDA Regulation appeared first on Payments Cards & Mobile.