Brussels (Brussels Morning) – The European Parliament proposes innovation-friendly regulations for open finance, empowering customers with control over financial data access and fostering competition and innovation.
The European Parliament’s Economic and Monetary Affairs Committee (ECON) propose new, innovation-friendly regulations allowing customers to maintain their financial data safe and efficiently utilise them to get adequate financial service. MEPs adopted their recommendation for a coordinated framework for admission to financial data at the EU level, with 43 votes to 1 and 5 abstentions.
What Proposals Does the ECON Committee Advocate?
According to the Press of the European Parliament, the framework would be designated for the access of customer data processed by financial institutions across the financial sector beyond payment account data. Based on the owner’s consent, their data (including holdings of savings and assets in financial instruments and insurance-based asset products as well as data collected to carry out a usefulness and appropriateness assessment) would be made available to design and provide tailor-driven and data-driven financial products and services.
For smaller businesses access to data would be useful when drawing new customers, lowering costs and obstacles of entry thus increasing contest and innovation for financial products and services.
Who Controls Access to Customer Financial Data?
Customers would determine how and by whom their financial data is utilised. The access will be established on customers’ explicit consent and data users would have to determine what they plan to make with them. The data could not be transmitted to a third party without permission. Moreover, approval could be withdrawn at any time and free of charge.
Financial data access strategy members, including data holders and data users, should therefore be needed to agree on the contractual liability for potential data violations, which foresees customer compensation in matters if data was misused, for example, if data was to be transferred to a third party without the customer’s explicit permission. Processing of personal data in the context of the latest rules should be carried out following the existing EU legislation.
What Data Is Excluded from Regulation Scope?
Data related to sickness and health coverage would be excluded from the scope, as well as confidential enterprise data and undisclosed know-how. MEPs also resolved that the large digital platforms specified as Gatekeepers according to the Digital Markets Act should not be qualified to become financial information service providers (currently appointed gatekeepers are Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft). These are venues whose dominant online position makes it virtually impossible for businesses to reach end users if not via their gateways, and their exclusion seeks to ensure that they cannot avoid the rules in case they owned or controlled data users
How Will Data Access be Facilitated?
MEPs submitted data access by way of high-quality technical interfaces, they also approved that data holders and data users should be permitted to use existing market standards and infrastructures for technical interfaces such as application programming interfaces when designing common standards for mandatory data access. Data holders should be capable of requesting reasonable compensation from data users for expenses incurred in providing access and those linked to putting in place and maintaining application programming interfaces.
What Is EBA’s Role in Implementing Regulation?
The European Banking Authority (EBA) should specify a register of authorised financial information service providers, as well as financial data access methods approved between data holders and data users. Finally, MEPs desire to give 12 more months to small businesses to apply the rules, to secure their proportional involvement.
Michiel Hoogeveen the lead MEP stated: “In an ever more digitalized world, it is important that consumers and firms have more efficient control access over their financial data beyond payments. With Open Finance, they will be able to benefit from financial products and services that are better tailored to their needs”.
