EU FIDA Discussions: Topics and Subjects Under Consideration
The Financial Data Access Regulation (Fida), a significant Open Finance regulation in the EU, is currently at the centre of negotiations, as stakeholders grapple with the scope of data access, operational burdens, and implementation details.
Fida, which aims to simplify access to financial data for fintechs and other services, was initially not on the EU Commission's agenda for the current year due to the Commission's goal of reducing burdens and requirements for companies. However, it has since made a comeback, largely due to pressure from member states, particularly France.
The key points of contention revolve around the expansion of data access scope, operational and compliance burdens, interplay with other regulations, industry resistance, calls for simplification, and governance and data-sharing scheme design.
Expansion of Data Access Scope
The proposed regulation would significantly broaden access beyond payment services (PSD2) to include savings, mortgages, credit, investments, pensions, and insurance products. This expansion is challenging for the industry due to the scale and diversity of data involved.
Operational and Compliance Burdens
Financial institutions face significant operational challenges in developing infrastructure to provide real-time access across a wide range of products and customer segments. The cost implications, lack of clear use cases, and unclear market demand make it difficult for institutions to justify compliance.
Interplay with Other Regulations
There is uncertainty about how Fida interacts with other EU data laws, such as the Data Act (EU 2023/2854), especially regarding the definitions of data users and recipients, legal restrictions, and data-sharing modalities. This regulatory overlap contributes to legal uncertainty and administrative burdens.
Industry Resistance and Commission Stance
Banks and insurance companies have expressed opposition, likely due to these burdens and potential commercial impacts. However, the European Commission has rejected industry pushback and is pressing forward with Fida regulations, emphasizing the importance of data access for innovation and competition.
Calls for Simplification and Scope Narrowing
Some industry voices advocate reassessing Fida to simplify the regulatory burden, possibly narrowing scope and making data sharing conditional on demonstrated market demand, or even withdrawing Fida in favour of coordination with the Data Act to ensure a more economically viable framework.
Governance and Data-Sharing Scheme Design
Fida also asks the industry to take the lead in designing shared data access schemes with binding rules and standards to ensure secure and efficient data sharing, which is a complex technical and organisational challenge.
Timeline and Uncertainties
The EU Commission has set a deadline of 18 months for setting up the Data Schemes for Fida, with the first data exchange to follow six months later. However, it is still unclear how quickly data holders must implement the requirements of Fida, and it's likely to take another three to four years for FIDA to come into effect.
Potential Opportunities and Challenges
Lars-Thorben Niggehoff, a freelance journalist, reports a lack of awareness among data holders about the potential opportunities of Fida. On the other hand, many banks currently view Fida as a burden rather than an opportunity.
The regulation would enable customers to see via a dashboard which data they are making available and adjust or withdraw consents. Fida would also allow banks, insurers, and other financial firms to make their customer data accessible via an interface.
Trilogue negotiations between the Commission, European Parliament, and Council of the European Union began in early April, after Fida made it back onto the agenda. It is still unclear how quickly these negotiations will be completed, with some predicting it could take until the first or second quarter of 2026. The return of Fida onto the agenda was due to pressure from member states, particularly France.
There is a proposal from the European Parliament to exclude reinsurers from the obligation to share data under Fida. The exact role of associations, banks, or third-party providers in setting up the schemes for Fida remains unclear.
The EU Commission hopes that Fida will lead to the creation of new and innovative business models in the financial sector and give consumers better control over their data. Despite the challenges, the negotiations continue, balancing the ambition of broad data access to stimulate innovation and competition with practical considerations of cost, legal clarity, and operational feasibility for financial institutions.
- The Finance sector, including banks, insurers, and fintechs, is continually wrestling with the operational and compliance burdens associated with the implementation of Fida, a regulation intended to expand data access beyond payment services to encompass savings, mortgages, credit, investments, pensions, and insurance products.
- As fintechs anticipate potential opportunities from Fida, such as gaining simplified access to financial data, they are also confronted with the technical and organizational challenges involved in designing shared data access schemes with binding rules and standards, as mandated by the regulation.
