Open Finance: MEPs want to give customers more control over financial data

On Thursday, the EU Parliament's Committee on Economic and Monetary Affairs (ECON) adopted the position of the representatives for the proposed regulation on easier access to financial data with a large majority of 43 votes. Only one MEP was against and five abstained. In principle, customers are to be given the right to pass on their data to users such as financial institutions or FinTechs in a secure, machine-readable format. The aim is to boost tools for comparing financial products or providing personalized online advice. Institutions that already have relevant customer data are also to be obliged to make this information available to other financial institutions with the consent of the data

More competition for financial products

The EU Commission launched the draft for an open financial data area (Open Finance) in June as part of a comprehensive legislative package for payment services and open banking. Data on savings and investments in financial instruments, insurance-based investment products and data collected for suitability and appropriateness checks are to be included. MEPs consider the planned instruments to be particularly useful for smaller companies in order to attract new customers, reduce costs and barriers to entry and thus increase competition and innovation in financial products and services.

In contrast, the parliamentarians want to keep big tech companies out of the new financial data space as far as possible. According to them, the large digital platforms that the Commission has classified as "gatekeepers" under the Digital Markets Act (DMA) should not be entitled to become relevant financial information service providers. Currently, Alphabet, Google, Amazon, Apple, ByteDance (TikTok), Meta and Microsoft are designated as such gatekeepers. According to the MEPs, these are platforms whose dominant online position makes it practically impossible for other companies to reach end users on their own without big tech involvement. The exclusion of gatekeepers is intended to ensure that they "cannot circumvent the rules" if they own or control users' financial data. ING Bank, for example, had previously complained that the data sharing mechanism from the EU Payment Services Directive PSD2 would primarily benefit data leeches.

Strong protest from digital association CCIA

According to the resolution, customers should generally decide how and by whom their financial data is used. Information may not be passed on to third parties without consent. It should also be possible to revoke an opt-in at any time and free of charge. Members of the outlined system for access to financial data want to oblige MEPs to agree on contractual liability for potential data breaches. The agreement should provide for compensation for customers in the event that information is misused. Data from life and health insurance policies will be excluded, as will confidential business information and undisclosed know-how.

According to the parliamentarians, data will be accessed via high-quality technical interfaces, for which providers and authorized parties can develop standards. Data holders should be able to demand appropriate compensation for the costs they incur in providing access and in setting up and maintaining programming interfaces. According to the plan, the European Banking Authority (EBA) will set up a register of approved financial information service providers and agreed access rules. Small companies will have twelve months longer to apply the regulations. The Computer & Communications Industry Association (CCIA Europe) is sharply critical. According to the association, the exclusion of big tech from a market advertised as "open" would contradict the core of the regulation and deprive consumers of important innovative services.

(mho)