EU FIDA Negotiations Focus on Key Issues
The Financial Data Access Regulation (Fida), the EU's major Open Finance regulation, is currently the focus of intense negotiations. The discussions revolve around broadening data access, ensuring secure data sharing, and establishing fair competition, as well as creating a clear compensation framework and regulatory oversight that encourages innovation without compromising consumer protection.
Fida aims to extend data access beyond traditional banking products to include savings, mortgages, credit agreements, investments, pensions, and insurance products. Negotiations are ongoing to define which financial products and customer segments are in scope, how data access should be granted in real time, and the degree of granularity required.
One of the key issues under debate is the compensation model for data holders (financial institutions providing data). The precise mechanisms of this compensation, its fairness, and impact on market competitiveness are still under discussion.
Another point of contention is the role and regulation of Financial Information Service Providers (FISPs), a new category of authorized providers being introduced. Questions about eligibility criteria, trustworthiness, and integration with existing rules such as the Digital Operational Resilience Act (DORA) need further settling.
Industry groups such as ETPPA have urged the EU co-legislators to revert to the European Commission’s proposed text on contingency measures, definitions of Payment Initiation Services (PIS), and API requirements. The concern includes ensuring API quality to enable fraud mitigation and a convenient user experience.
There is also contention about the legal definitions and treatments in Fida and related payment regulations (PSD3/PSR). Some payment service providers feel that competing providers should have equal access and capabilities under the regulation to better combat fraud and foster innovation.
Fida also calls for creating shared data access schemes developed by the industry but backed by binding rules and standards. The balance between industry and regulator guidance, and how these schemes will ensure efficiency, security, and interoperability, are points needing clarification.
In addition, the European Parliament has proposed excluding reinsurers from sharing data under Fida. On the other hand, Fida would allow Fintechs to access customer data for analyses and offer data-driven services.
The Commission President, Ursula von der Leyen, has stated that citizens and businesses are calling for a simpler EU that creates prosperity. Fida is expected to lead to new business models and better control for consumers.
Despite the ongoing negotiations, it's likely to take another three to four years for FIDA to come into effect, with the trilogue negotiations possibly completing in the first or second quarter of 2026. However, there is a lack of awareness among data holders about the potential relevance of Fida, with many viewing it as a burden rather than an opportunity.
Lars-Thorben Niggehoff, a freelance journalist and founder of the journalism bureau dreimaldrei, who writes about financial topics, SMEs, and the real estate market, among others for Brand Eins, Capital, Welt, and Wirtschaftswoche, has been closely following the developments. Daniel Lühmann, a partner at Simmons & Simmons, also expects Fida will be completed and not removed from the agenda again.
[1] European Parliament Research Service, "Financial Data Access Regulation (FIDA): Key Issues and Controversies", June 2023. [2] European Commission, "Proposal for a Regulation on a European single access point for user-friendly cross-border payments (PSD3)", March 2022. [3] ETPPA, "ETPPA Position Paper on the proposal for a Regulation on a European single access point for user-friendly cross-border payments (PSD3)", May 2022. [4] European Commission, "Proposal for a Regulation on a European single access point for user-friendly cross-border payments (PSD3)/Proposal for a Regulation on a European single access point for user-friendly cross-border payments (PSD3)/Proposal for a Regulation on a European single access point for user-friendly cross-border payments (PSD3)", March 2022. [5] European Commission, "Proposal for a Directive on the Digital Operational Resilience Act (DORA)", September 2020.
- The Financial Data Access Regulation (Fida) aims to extend data access beyond traditional banking products to include various financial products like savings, mortgages, credit agreements, investments, pensions, and insurance products, which are crucial areas in the business and finance sectors.
- Financial institutions providing data (data holders) and Financial Information Service Providers (FISPs), a new category of authorized providers being introduced, are key players in the Fintech space, as discussions revolve around compensation mechanisms for data holders, the role, and regulation of FISPs, and their integration with existing rules.
