Dealers and advisors may not see themselves as important players in open or consumer‑driven banking (CDB) discussions, but perhaps they should rethink this. While called consumer‑driven, the proposals have received little input from real consumers. CDB promises benefits. But there’s a lot to be lost if the system is implemented without strong consumer and investor protections.
Draft Consumer‑Driven Banking Act (CDBA) regulations, released for comment in June, will reshape how Canadians share financial data. The act itself received Royal Asset on March 26, as part of the legislation implementing Budget 2025. Provisions related to consumer data sharing have been promised, but they are not yet in force. The framework of the CDBA is not yet operational.
Fintechs, telecoms and other non‑financial companies will soon be part of financial‑data flows under the CDBA. Advisors may see client issues originating in sectors that have never been subject to financial‑sector-level regulation.
If implemented without stronger protections for Canadians, CDB risks increasing fraud, misidentification and data misuse — all of which may cause problems that ultimately land on an advisor’s desk. They’re often the first to hear from clients when something goes off the rails. You will be the one explaining what happened, helping unwind the damage and perhaps absorbing a reputational hit as occurred with a regulatory data breach last year. That’s why the investment industry should care deeply about these regulations.
Competition and innovation are essential to productivity, economic growth and efficiency. But large‑scale change can cause serious harm if implementation outpaces the counterbalancing safeguards required to manage new risks.
While safeguards are planned to support secure data‑sharing, at present they are aspirational. The allocation of liability remains unclear. Non‑bank data handlers lack sufficient rules, experience, complaint-handling processes and disclosure requirements. Consent models fail in practice. Cross‑border risks outpace protections. And there is no external complaints body.
Some argue it makes sense to designate the Ombudsman for Banking Services and Investments (OBSI) as the complaints body under consumer banking provisions, but the current OBSI model does not deal with multi‑entity or cross‑participant disputes, meaning there is currently no accessible mechanism for consumers to address problems involving more than one entity, or more than one type of entity.
The draft CDBA reflects years of work by many organizations because the issues are complex and they cross jurisdictional lines. The arguments for change are compelling. But this comes just as AI and digital interconnectedness are both amplifying the speed and seriousness of fraud. AI is also being used in customer service, making it more difficult for investors to speak with a person when a situation requires real judgement.
Here’s what needs to happen before CDB goes into effect.
1. Reduce the risk of serious harm during the transition period
The period between the implementation and stabilization of the CDB regime is when investors, dealers and advisors may be most exposed. Responsibilities are divided across federal and provincial regulators, some gaining new roles and others seeing their roles reduced.
This fragmentation will leave gaps that won’t be easy to navigate.
Without strong early protections, the adjustment period will be marked by elevated fraud and errors that it will take time to correct (assuming correction is possible). Advisors will be pulled into the fallout as clients seek help understanding what happened and how to fix it.
2. Prioritize investor protections
Real consumer involvement in CDB planning has been limited due to the complexity of the policy and technological landscape. Everyone wants faster, easier information transfers. But few understand the risks, and few want to accept their associated costs.
The federal government has eliminated its already-miniscule consumer‑protection funding at precisely the moment when a focus on consumer interests is essential.
The greatest risks arise outside traditional financial service providers, where oversight is minimal and fragmented, and safeguards are weakest. Consumers already struggle to activate basic protections such as credit bureau freezes and marketing opt‑outs. Under CDBA, these challenges will multiply as new entrants — many with limited compliance or privacy maturity and some with negligible capital underpinning — begin handling more sensitive personal and financial information.
3. Ensure safe implementation
Several technical elements must be strengthened to ensure safe CDB implementation — especially in the areas of consent, authentication, response and redress. Dealers and advisors have processes in place, but non‑financial companies either do not or theirs are weaker. When problems occur, investors will pursue whoever they can reach, know or believe has the resources to pay — including advisors.
Some issues cannot be fixed through regulation alone. Legislative amendments will be required to ensure meaningful oversight roles and a fair allocation of liability and compensation obligations.
Dealers and advisors have had little meaningful input into the CDBA framework, yet they will inevitably be pulled into client complaints arising from failures in sectors outside their control.
The wealth management industry must insist on robust disclosure and redress obligations for new entrants. The industry must not be left holding the bag while new entrants cherry pick CBD benefits.