New EU data rules must embed strong consumer protections against data misuse

17 December 2024 - 09:47 h

Press Release

Finance Watch’s latest position paper outlines urgent recommendations for the Financial Data Access (FiDA) Regulation as the file enters the final legislative stage.

A key concern lies in granting Big Tech access to consumer financial data. Finance Watch warns against ‘letting Big Tech loose in the financial data space’. Big Tech already controls vast amounts of personal and behavioral data collected across their platforms. Combining this with consumer financial data poses a unique and significant risk to consumer protection and fair competition. Strict safeguards are needed to prevent these ‘gatekeepers’ from using combined data to inform discriminatory algorithms that exclude vulnerable individuals from essential services.

The Council and Parliament approach to Big Tech differs:

The Council outright prohibits gatekeepers from accessing FiDA data until they complete an assessment and meet strict compliance standards.
Advocates for a binding role for the European Supervisory Authorities (ESAs) in assessing gatekeeper compliance but stops short of mandatory exclusion, stating gatekeepers ‘may’ be excluded if they fail to meet standards.

“The Council decision to shut the door on gatekeepers who fail compliance checks is a strong step towards protecting consumers and ensuring fair competition”

Peter Norwood, Senior Research & Advocacy Officer at Finance Watch

The risks go beyond Big Tech. Without legally binding data use perimeter rules, all financial players, including traditional incumbents, could misuse consumer data, like unfairly excluding people from accessing financial products or aggressively marketing unsuitable loans or insurance policies.

The Council’s reliance on non-binding guidelines for data use fails to address these risks, leaving consumers exposed. In contrast, the Parliament supports enforceable rules to ensure that consumer data is used responsibly across loans, insurance and investment products.

“The Council’s position falls flat when it comes to data use perimeter rules, leaving consumers dangerously exposed. Opening up consumer data without proper safeguards risks financial exclusion, like people being denied insurance because of data which reveals past illnesses.”

Peter Norwood, Senior Research & Advocacy Officer at Finance Watch

Finance Watch urges co-legislators to adopt key safeguards and ensure the Financial Data Access (FiDA) Regulation delivers meaningful benefits for consumers while protecting them from harm. Without strong, enforceable rules, the expanded access to consumer financial data could lead to misuse, undermining consumer rights, financial inclusion and fair competition.

Read the full position paper

– Ends –

Notes to Editors:

The Council adopted its general approach on FiDA 4 December
ECON vote on opening trilogue negotiations with the Council 4 December
Joint Statement from Financial Industry pushing to delay FiDA 9 December
For more information on Finance Watch’s position on FIDA, please see the Finance Watch policy brief Citizens are not the product.

ABOUT FINANCE WATCH

Finance Watch is an independently funded public interest association dedicated to making finance work for the good of society. Its mission is to strengthen the voice of society in the reform of financial regulation by conducting advocacy and presenting public interest arguments to lawmakers and the public. Finance Watch’s members include consumer groups, housing associations, trade unions, NGOs, financial experts, academics and other civil society groups that collectively represent a large number of European citizens. Finance Watch’s founding principles state that finance is essential for society in bringing capital to productive use in a transparent and sustainable manner, but that the legitimate pursuit of private interests by the financial industry should not be conducted to the detriment of society.