WASHINGTON– The Consumer Financial Protection Bureau has essentially launched a do-over on its open-banking regulations related to giving consumers control over the sharing of their personal financial data between financial institutions, fintechs and other providers.
As the CU Daily has been reporting, the Trump administration has reversed the Biden administration’s rules that would have fostered open banking, while the nation’s biggest bank, JPMorgan Chase, has recently announced plans to charge fintechs every time they seek to access customers’ account information.
Fintech trade groups have been calling on the Trump administration ban the practice of charging account information fees.
As Reuters noted, the Trump administration this year initially sided with a banking industry call to scrap the regulations entirely, claiming they exceeded the agency’s legal powers, before changing tack last month, citing “recent events in the marketplace.”
Penny Lee, president of the Financial Technology Association, told Reuters the organization welcomes the rewrite process, saying in a statement that the Trump administration was spotlighting banks’ “threats to impose more fees on Americans” that she said amounted to barriers to innovation.
‘Security First’
The Bank Policy Institute, a lobby group that last year filed suit to block the rule’s original version, also welcomed the re-started rulemaking process, saying it presented the opportunity to correct the Biden version by “putting consumers’ security first” Reuters reported.
In its new public notice the CFPB is asking questions that indicate key areas are again open to debate, even though the regulations were prescribed 15 years ago as part of the 2010 Dodd-Frank financial reform legislation.
“The agency again seeks to decide who can access data on consumers’ behalf, whether banks may charge fees for access to cover the costs of sharing and how best to handle the risk of data breaches,” Reuters reported. “Those questions lie at the center of a Washington battle between the traditional finance and fintech sectors that sprung to the fore in July.”
A CFPB spokesperson told the news agency that it had “always” said a new rule would be forthcoming. However, the agency did not inform a federal court of this until last month.
Financial Trade Groups Push Back
Financial industry trade groups have argued the open banking regulations adopted last year would force lenders to disclose their customers’ data to potentially untrustworthy third parties, who should also be held liable for breaches that expose consumer data and compensate banks for the cost of providing access.
