and how it views the industry trend in a South African context – including the pitfalls it faces and what needs to be done from a regulatory point of view to get it to work.
According to the FSCA, these are some of the benefits of Open Finance that support its wider objectives – however, they also come with some pitfalls. The FSCA is exploring the potential for a phased mandatory regulatory regime for Open Finance, in which relevant financial institutions would be required to participate by developing the necessary infrastructure to share data with TPPs with the consent of financial customers.
However, the FSCA acknowledges the necessity of assessing the complexities and costs involved in adopting a mandatory regime.The FSCA has identified four types of participants that will require regulatory oversight: financial institutions, TPPs, fintechs and other service providers. The level of regulatory oversight over each participant will be proportionate to the risk that it poses to Open Finance.
The Draft Position Paper sets out proposed principles for obtaining and maintaining customer consent, including that consent to use customer data should be unbundled rather than aggregated with other consent agreements or permissions.The Protection of Personal Information Act, 4 of 2013 already alludes to many of the principles in respect of consent proposed in the Draft Position Paper. The FSCA intends only to strengthen the existing regulatory framework to close any gaps.