AFME responds to EC FiDA proposal
02 November 2023 Europe
Image: Tj/stock.adobe.com
The Association for Financial Markets in Europe has shared its response to the European Commission’s consultation on the FiDA proposal, which seeks to open up access to financial data.
Considering the safety of such an initiative, AFME states that the Open Finance framework must meet operational resilience, cybersecurity and data protection standards currently in place for financial institutions. The association adds that it “remains concerned” that financial information service providers, a new category of data users outlined in the proposal, could be a “weak link” in the financial system if these standards are not met.
To ensure fairness in cross-sector data sharing, AFME states that “BigTech gatekeepers” should not be allowed to authorise as financial information service providers or use financial institutions’ data held under Open Finance until their own data sharing has been implemented under the Digital Markets Act.
It adds that Open Finance should only be applied to individuals and small- to medium-sized enterprises, given that the primary value added will be for retail customers. However, banks and other large organisations should continue to invest in data-driven customer services, the association says.
Although efficiency in data sharing “without unruly delay” is supported, AFME states that “real-time data sharing is disproportionately burdensome and does not yield commensurate benefits”.
In order to encourage investments in secure data-sharing infrastructure, AFME comments that compensation should be included in regulation, such as the Payment Services Regulation. This should be structured in a way that facilitates access for all participants; capped at cost for small and micro data users, and more substantial for mid- and larger-sized companies.
AFME recommends an implementation timeframe of at least 36 months for the schemes using a phased approach, with a minimum of 12 months after this for the rest of FiDA. This will allow for the prioritisation of targeted use cases, and a more balanced and pragmatic approach to governance measures.
James Kemp, managing director at AFME, says: “We support the EU’s ambition to create a consumer-centric data-sharing ecosystem. To achieve this, policies such as the new EU Open Finance framework need to contribute to a fair and secure data ecosystem that adds value to consumers and end users. In order for the proposal to bring the full suite of benefits to the EU financial data ecosystem, some key changes are required.”
Considering the safety of such an initiative, AFME states that the Open Finance framework must meet operational resilience, cybersecurity and data protection standards currently in place for financial institutions. The association adds that it “remains concerned” that financial information service providers, a new category of data users outlined in the proposal, could be a “weak link” in the financial system if these standards are not met.
To ensure fairness in cross-sector data sharing, AFME states that “BigTech gatekeepers” should not be allowed to authorise as financial information service providers or use financial institutions’ data held under Open Finance until their own data sharing has been implemented under the Digital Markets Act.
It adds that Open Finance should only be applied to individuals and small- to medium-sized enterprises, given that the primary value added will be for retail customers. However, banks and other large organisations should continue to invest in data-driven customer services, the association says.
Although efficiency in data sharing “without unruly delay” is supported, AFME states that “real-time data sharing is disproportionately burdensome and does not yield commensurate benefits”.
In order to encourage investments in secure data-sharing infrastructure, AFME comments that compensation should be included in regulation, such as the Payment Services Regulation. This should be structured in a way that facilitates access for all participants; capped at cost for small and micro data users, and more substantial for mid- and larger-sized companies.
AFME recommends an implementation timeframe of at least 36 months for the schemes using a phased approach, with a minimum of 12 months after this for the rest of FiDA. This will allow for the prioritisation of targeted use cases, and a more balanced and pragmatic approach to governance measures.
James Kemp, managing director at AFME, says: “We support the EU’s ambition to create a consumer-centric data-sharing ecosystem. To achieve this, policies such as the new EU Open Finance framework need to contribute to a fair and secure data ecosystem that adds value to consumers and end users. In order for the proposal to bring the full suite of benefits to the EU financial data ecosystem, some key changes are required.”
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