Account Information Service Providers (AISPs) are entities authorised to access a user’s bank account information and provide various services based on that data. They are part of the broader ecosystem of open banking, which allows third-party providers to offer financial services with the user’s explicit consent.
AISPs are third-party service providers that aggregate and analyse account information from multiple banks and financial institutions. They do not hold or manage funds but provide insights and services based on the account data they access.
Key Functions and Services
Data Aggregation – AISPs consolidate financial information from different accounts into a single platform, giving users a comprehensive view of their financial health. This is especially useful for individuals managing multiple accounts across various banks.
Financial Insights and Management – They provide tools for budgeting, spending analysis, and financial goal tracking. By analysing transaction data, AISPs offer personalised advice and actionable insights to help users manage their finances better.
Credit Scoring Enhancement – With access to a broader range of financial data, AISPs can contribute to more accurate credit scoring models, benefiting both consumers and lenders.
Service Information – By integrating with various financial apps, AISPs enable innovative services such as automated savings plans, investment advice, and tailored financial products.
Regulatory Framework
Revised Payment Services Directive (PSD2) – PSD2 is a European Union directive that aims to make payments more secure, boost innovation, and enhance consumer protection. It provides the legal foundation for the regulation of AISPs across Europe, including the UK. Under PSD2, AISPs can access account information from banks and other financial institutions with the explicit consent of the user. This directive mandates strong customer authentication and sets standards for secure information.
Financial Conduct Authority (FCA) – AISPs must be authorised and registered by the FCA to operate in the UK. This process involves a thorough assessment of the applicant’s business model, security measures, and compliance with regulatory requirements. Once authorised, AISPs are subject to ongoing supervision by the
FCA. This includes regular reporting, audits, and inspections to ensure continued compliance with regulatory standards. The FCA’s regulatory oversight ensures that AISPs adhere to high standards on consumer protection, including the safeguarding of personal data and transparent disclosure of services.
Regulatory Requirements
Authorisation Process – AISPs must submit a detailed application to the FCA, including information about their business model, governance structure, financial projections, and risk management strategies. The FCA evaluates the application to ensure that the AISP has adequate systems and controls in place to manage risks and protect consumers. Upon successful evaluation, the AISP is registered and authorised to provide account information services in the UK.
Strong Customer Authentication (SCA) – AISPs must implement SCA to verify the identity of users accessing account information. This typically involves
multi-factor authentication, combining something the user knows (e.g. a password), something that the user has (e.g. a smartphone) and something the user is (e.g. biometric verification). SCA is a mandatory requirement under PSD2, aimed at reducing fraud and enhancing the security of online transactions.
Consumer Consent – AISPs must obtain explicit consent from users before accessing account information. This consent must be clear, informed, and easily withdrawable. AISPs must provide users with transparent information about the data being accessed, the purpose of the access, and how the data will be used.
Data Protection – AISPs must comply with the
General Data Protection Regulation (GDPR), which sets stringent standards for data protection and privacy. This includes obtaining explicit consent for data processing, ensuring data security, and providing users with rights over their data. AISPs must implement robust security measures to protect user data from unauthorised access, breaches, and other security threats.
Reporting and Auditing – AISPs are required to submit regular reports to the FCA, detailing their activities, security incidents, and compliance with regulatory requirements. The FCA may conduct periodic audits and inspections to ensure that AISPs maintain high standards of compliance and consumer protection.
Insurance for AISPs
Cyber Insurance – This type of insurance covers financial losses resulting from cyber incidents such as data breaches, hacking, and other cyber attacks. It typically includes costs related to data recovery, legal fees, regulatory fines, and notification expenses. Given that AISPs handle sensitive financial data, they are prime targets for cyber attacks.
Cyber insurance helps mitigate the financial impact of such incidents and provides resources to manage and recover from cyber crises.
Professional Indemnity Insurance – Also known as errors and omissions (E&O) insurance, Professional Indemnity covers claims made by clients for negligence, errors, or omissions in the services provided by the AISP. It includes legal defence costs and any settlements or judgements. AISPs are vulnerable to claims from clients who may suffer financial losses due to errors in data handling or service provision. Professional Indemnity insurance protects against these liabilities.
Directors and Officers Insurance –
D&O insurance provides protection for directors and officers against personal liability for decisions made in their corporate roles. This ensures that senior management can make decisions without the fear of personal financial loss, thus attracting and retaining high-quality leadership.
About the author
Ryan Nevin is an Account Broker at Get Indemnity™ - he is an ambitious professional who is currently studying towards being a Chartered Insurance Broker.
