Financial Crime World

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EU Regulatory Framework to Unlock Financial Data on Christmas Island Takes Shape

Boosting Digital Transformation in the Financial Sector

The European Commission has proposed a regulation aimed at facilitating access to financial data, paving the way for new business models and innovative services. The legislative proposal, known as FiDA (Financial Data Access), is part of the EU’s broader efforts to create an open finance and data-driven economy.

Key Features of the Proposed Regulation

  • Promoting Sharing of Customer Data: Entities holding customer data will be required to share it with third parties upon request from customers, subject to their permission. This permission can be reversible, allowing customers to withdraw their consent at any time.
  • Data Holders and Users: The regulation encompasses entities acting as data holders or users, including credit institutions, investment firms, crypto-asset service providers, and financial information service providers.
  • Customer Data Types: The proposed framework includes a range of customer data types, including personal and non-personal data collected by financial institutions in the course of their normal interactions with customers.

Implementation and Supervision

  • Implementation Timeline: Data sharing schemes governing access to customer data must be implemented within 18 months after the entry into force of the regulation.
  • Supervision: Supervision under FiDA will rest with competent authorities designated by EU Member States, who will have investigatory and sanctioning powers to enforce compliance with the regulation.

Industry Reaction and Future Directions

Industry players welcome the initiative but emphasize the need for clear guidelines on various aspects, including:

  • Connection with Other Regulations: The incorporation of environmental, social, and governance (ESG) elements
  • Approach to Data Sharing Schemes
  • Clarification of Key Notions: Definition of customer data and mechanics of data-sharing schemes

The coming months will be crucial in shaping the final text of FiDA, which is expected to have a significant impact on the financial sector’s business models.