On August 1st, 2023, SEBI released a consultation paper on collating and defining use cases of financial information users in the Account Aggregator Framework in securities markets.
What is an Account Aggregator framework ?
An Account Aggregator (AA) is a type of RBI regulated entity (with an NBFC-AA license) that helps an individual securely and digitally access and share information from one financial institution they have an account with to any other regulated financial institution in the AA network.
Can the data be shared without the consent of the individual?
No. User consent is mandatory and AA provides step by step permission and control for each use of customer data.
Can Account aggregators see or store Customer data?
No. Account Aggregators cannot see or store customer data (since the data processed through them is encrypted); they merely transmit it from one financial institution to another based on a customer’s direction and consent. The end to end encryption makes the process secure.
Who is a Financial Information User (FIU)?
Any entity registered with and regulated by a financial sector regulator can be a Financial Information User (FIU). For eg: If stock brokers join the AA framework, they can get the necessary information about the client like bank and insurance info etc.
Some more use cases:
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A Registered Investment Adviser seeking information on financial assets of the client/investor via the AA framework in order to devise a financial plan for the client.
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A Registered Portfolio Manager seeking information on the portfolio/ financial assets of the client/investor via the AA framework with reference to managing the portfolio of the client.
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Verification of bank account wherever required when a client is on-boarded by an intermediary.
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Regulators accessing financial data submitted by regulated entity (as per regulations) via the AA framework.
For more context on Account aggregator framework and detailed information on use cases, check our earlier post on this topic:
Questions by SEBI:
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Do any class or type of intermediaries in the Indian Securities market be excluded from functioning as FIUs? If so, please provide the rationale.
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What are the potential use cases for the AA framework for SEBI regulated entities?
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Are there any additional categories of financial information which may be included under the ambit of the AA framework? If so, please provide the use case/s and rationale.
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Are there safeguards required in the AA Framework in order to protect the interests of customers in terms of additional data security, or to curb potential misuse of the financial information in frauds, misappropriation, mis-selling or unsolicited cross-sell/upsell, etc?
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Are there safeguards or measures required in the AA Framework in order to address concerns of customers, financial information providers, account aggregators or financial information users? If so, please provide the rationale.