The Consumer Financial Protection Bureau (CFPB) is seeking feedback on reopened rulemaking under Section 1033 of the Dodd-Frank Act. This has to do with personal financial data generated by a user and who controls this information, and the potential for fees charged by a financial services firm. During the Biden Administration, Open Banking rules were formed but shelved following the change in government. The new CFPB has indicated its intent to revisit the issue.
Recently, several large banks announced they intend to charge fees for firms accessing their consumer data – creating a regulatory moat. This directly impacts the concept of Open Banking in the US.
The concept of Open Banking has to do with data sharing, encouraging competition, and providing better services for customers.
If a consumer controls this data, it can make moving accounts and accessing better services easier. This can also encourage competition. Establishment banks fear the competition will undermine their ability to drive revenue. The CFPB is responding to concerns from the Fintech industry regarding legacy banks and other firms seeking a regulatory path that could harm competitors like Fintechs.
The Financial Technology Association (FTA) has issued a statement on the Advance Notice of Proposed Rulemaking (ANPR) released by the CFPB.
Penny Lee, President and CEO of the FTA, says Open Banking drives innovation and competitiveness, and a rule affirming consumers’ right to control the data is essential to moving forward and protecting these consumers.
“The Trump Administration is calling needed attention to barriers to innovation being erected by the largest banks, especially recent threats to impose more fees on Americans who simply want open access to their own bank accounts. This rulemaking gives consumers, innovative banks, Fintechs, and Main Street businesses an opportunity to stand up for Americans’ rights to access innovation and control their own financial data without unfair roadblocks. We look forward to participating in the rulemaking process and submitting our full comments in response to the ANPR.”
The FTA recently coordinated with dozens of CEOs asking the White House to support innovation and competition and to oppose the big banks’ threatened fees
