{"id":264999,"date":"2025-11-06T06:37:09","date_gmt":"2025-11-06T06:37:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/264999\/"},"modified":"2025-11-06T06:37:09","modified_gmt":"2025-11-06T06:37:09","slug":"federal-budget-2025-ottawa-takes-aim-at-banking-sector-with-measures-to-boost-competition","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/264999\/","title":{"rendered":"Federal budget 2025: Ottawa takes aim at banking sector with measures to boost competition"},"content":{"rendered":"

The federal government is tackling Canada\u2019s concentrated banking industry<\/a> with measures in the federal budget<\/a> to boost competition by making it easier to switch lenders, regulating stablecoin, lowering fees and reducing hurdles for smaller lenders. <\/p>\n

Calls to improve competition in Canada\u2019s financial-services sector have been mounting amid concerns over the sluggish economy and the blow from U.S. tariffs. As part of his budget, Prime Minister Mark Carney<\/a> is taking a swing at cracking open the banking market. <\/p>\n

In a bid to reduce barriers to switching banks, Ottawa has set a timeline to introduce open banking legislation next year. By mid-2027, the federal government said it will allow consumers to authorize third parties to switch accounts, pay bills and take other actions on their behalf.<\/p>\n

A new set of open-banking rules would enable financial institutions to exchange information more efficiently and securely. This would provide consumers with more control over how they share their financial data with other institutions, making it easier for them to switch banks. <\/p>\n

The regime has faced several delays since development began in 2018, and Canada has fallen far behind its peers. Britain introduced open banking in 2017 and Australia followed in 2019. Last year, the U.S. introduced its own proposed rules. <\/p>\n

This budget is a Trump survival plan. Here are the highlights<\/a><\/p>\n

Providing fintech companies with the ability to not only view a customer\u2019s data but to take action on transactions is a significant update. Initially, it was believed that the rollout of open banking would launch with read-only access to data, allowing fintech companies to view customer information but not act on it. Instead, the government said it will roll out the regime by allowing new entrants to initiate transactions on behalf of customers.<\/p>\n

\u201cData is just the first step, but to be able to actually do something with that data, that\u2019s where it moves the dial,\u201d said Abraham Tachjian, Brim Financial Inc.\u2019s chief regulatory affairs officer and Canada\u2019s former open banking lead.<\/p>\n

\u201cWhether it\u2019s moving money from one account to another, or a variety of other applications that come with the ability to access a person\u2019s account, analyze information, and then do something with that information and move money to their benefit.\u201d <\/p>\n

The budget also revealed that Ottawa has transferred responsibility for the open banking regime to the Bank of Canada. <\/p>\n

In April, 2024, Ottawa tapped the Financial Consumer Agency of Canada (FCAC) to administer and enforce open banking legislation. <\/p>\n

Ottawa targets non-compete agreements at banks, telcos and other federally regulated companies<\/a><\/p>\n

Concerns mounted among many fintech companies that implementation would face further barriers because the FCAC has a mandate to focus on consumer protection rather than innovation. <\/p>\n

In recent years, the Bank of Canada has gradually assumed more responsibility for regulation of new financial services systems, including a new regime for payments technology companies and real-time rail infrastructure.<\/p>\n

\u201cThey have a deep bench of talent at the Bank of Canada and they have a good track record of implementation,\u201d said Fintechs Canada executive director Adriana Vega. \u201cFor us, it\u2019s a welcome change.\u201d <\/p>\n

In October, Bank of Canada senior deputy governor Carolyn Rogers referred to the banking sector as an oligopoly. Canada\u2019s big six banks \u2013 Royal Bank of Canada RY-T<\/a>, Toronto-Dominion Bank TD-T<\/a>, Bank of Nova Scotia BNS-T<\/a>, Bank of Montreal BMO-T<\/a>, Canadian Imperial Bank of Commerce CM-T<\/a> and National Bank of Canada NA-T<\/a> \u2013 collectively hold more than 90 per cent of all banking assets.<\/p>\n

Peter Routledge, who heads the Office of the Superintendent of Financial Institutions, has also endorsed the need to support innovation and loosen the barriers to entry. <\/p>\n

\u201cI\u2019ve never seen this level of chattiness\u201d on competition, Ms. Vega said. \u201cThey\u2019re all singing from the same songbook on competition, and you see that in the budget. It\u2019s a very clear signal.\u201d<\/p>\n

The budget also proposes lowering banking fees and reducing barriers for smaller banks and credit unions. <\/p>\n

Federal budget 2025: Plan for stablecoin rules to usher in Canada\u2019s \u2018digital dollar era,\u2019 advocates say<\/a><\/p>\n

Ottawa committed to banning or increasing transparency on certain fees, including costs tied to transferring investment accounts from one institution to another. It said the FCAC will prepare a report on fees charged by banks. <\/p>\n

To spur growth among small financial institutions and boost access to capital, Ottawa proposed raising the public holding requirement threshold to allow smaller banks to grow more before having to amend their ownership structure. <\/p>\n

Ottawa is also introducing measures for the regulation and enforcement of stablecoin, a type of digital token pegged to a fiat currency used to send payments more quickly and with fewer fees.<\/p>\n

The proposal follows moves by the U.S. Congress, which passed a bill dubbed the Genius Act in July to create a regulatory framework for stablecoins. <\/p>\n

\u201cThe launch of the Genius Act means that the U.S. has very actively taken a position and is moving aggressively forward in terms of setting up that regulatory framework,\u201d said Sonia Baxendale, chief executive officer of the Global Risk Institute. <\/p>\n

The budget also proposes enabling the regulation of payment service providers that use stablecoin. Currently, they are regulated as securities, which require restrictive rules that make it difficult to use the cryptocurrency for daily transactions. <\/p>\n

In June, Shopify Inc. launched a stablecoin payment option for merchants using USDC, which is backed by U.S.-dollar reserves.<\/p>\n

\u201cThe concern is the convenience of stablecoins could outweigh the inconvenience of operating in U.S. dollars,\u201d said Timothy Lane, Global Risk Institute executive in residence and former Bank of Canada deputy governor. \u201cIf that happens, then we could end up seeing a lot of transactions in Canada taking place using a form of money that is U.S.-dollar denominated.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The federal government is tackling Canada\u2019s concentrated banking industry with measures in the federal budget to boost competition…\n","protected":false},"author":2,"featured_media":265000,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[1397,121472,43,44,41,39,42,40],"class_list":{"0":"post-264999","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-appwebview","9":"tag-federal-budget-2025","10":"tag-headlines","11":"tag-news","12":"tag-top-news","13":"tag-top-stories","14":"tag-topnews","15":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/264999","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=264999"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/264999\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/265000"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=264999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=264999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=264999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}