The Conservatives introduced a private member’s bill Thursday in the House of Commons that calls on the federal government to move ahead with its delayed rollout of an open banking system.
The government had previously promised an early-2023 launch for open banking, but has not yet put forward an implementation plan. The bill, if passed, would require Finance Minister Chrystia Freeland to release such a plan. Open banking has also faced delays in the U.S., Britain and Australia, as they forge ahead with their own efforts.
Open banking is a term for a new set of rules that would enable financial institutions to exchange information more efficiently and securely. The purpose of such a system is to provide consumers with more control over how they share their financial data, making it easier for them to switch banks – sometimes a difficult process in Canada’s highly saturated financial industry.
Financial technology companies have long urged the government to implement open banking, in part because it would lower the barrier to entry for new players in Canada’s tight banking sector, where the Big Six banks dominate more than 90 per cent of the market.
In an interview, Conservative Leader Pierre Poilievre referenced this state of affairs. “One of the reasons there’s not a lot of competition is that it’s very hard to move between banks or to other financial institutions,” he said. “The big banks control the data of their customers and that gives them a massive advantage over challengers trying to break into the market.”
The bill, which would need multiparty support to pass, calls on Ms. Freeland to unveil a plan to implement open banking within 30 days of the legislation passing. If the House of Commons is not in session during that time, then she would have to do so within the first 10 days of the next sitting of the House.
If the plan were not introduced in the legislature within six months of the bill passing, then the minister would have to provide a report that explained the reasons for the delay and the expected timeline for the plan’s introduction.
Ottawa first promised to study open banking in the 2018 federal budget. During the 2021 election, the Liberals committed to launching such a system by January, 2023.
Ms. Freeland’s office confirmed in October that she had received a report this year from the lead bureaucrat on the file, Abraham Tachjian.
In a statement, the Department of Finance did not comment on open banking and the timeline for implementation, but said that it is “continuing its work on consumer-driven finance at this time.”
The Conservatives say in the bill that there is a “growing acknowledgement around the world that consumers have a right to use and move their financial data in ways that benefit them.” The bill also says open banking could lower bank fees and interest rates for consumers and businesses.
The Liberals and Conservatives have both taken aim at the banking sector in recent months, in particular targeting affordability and accessibility of products and services. In October, Ms. Freeland asked Canada’s largest lenders to reduce banking fees and help borrowers cope with higher mortgage costs. Ottawa has also hiked taxes specifically for banks and insurers, as mounting expenses and rising capital requirements squeeze profits in the sector.
The Conservatives have homed in on Royal Bank of Canada’s proposed acquisition of HSBC Bank Canada, calling on the federal government to block the deal or risk harming competition and boosting prices.
In October, Britain-based HSBC Holdings Plc put its Canadian subsidiary on the auction block. It has also left other global markets, in order to reallocate capital to areas where it believes it can grow faster. Some analysts have said that since HSBC has deemed its Canadian business unimportant to its global strategic priorities, its clients could be negatively affected if the lender is forced to remain in the market.
Mr. Poilievre said that, rather than being allowed to scoop up HSBC Canada, Canada’s big banks should work to lure away its customers by competing on pricing and terms for products and services. Otherwise, he said, a smaller bank should be encouraged to buy HSBC Canada.
Other countries have already begun implementing open banking systems. Britain started introducing open banking in 2017, and Australia started rolling out its system in 2019. In October, the U.S. Consumer Financial Protection Bureau introduced its own proposed rules.
At a conference in May, Mr. Tachjian said Canada is at risk of becoming the only Group of Seven country without an open banking system if it does not progress soon.
“In Ottawa, things just move as fast as they’re pushed,” Mr. Poilievre said. “They had a lot of time to study this, they have an army of policy analysts over at Finance Canada. They can do it if they put their minds to it.”