LEXINGTON, Ky. – The U.S. District Court for the Eastern District of Kentucky has granted a request to stay the compliance deadline for the CFPB’s Section 1033 rule, which halts the original timeline for the rule to take effect.
The rule, also referred to as the “open banking rule,” was designed to give consumers more control over their financial data and was set to take effect on a staggered schedule for different financial institutions starting in June 2026. It had been a keystone initiative for the CFPB under the Biden administration.
The decision comes after the CFPB signaled its intention to broadly reexamine and potentially revise the open banking rule, following a lawsuit filed by the Bank Policy Institute, Kentucky Bankers Association, and Forcht Bank.
Waiting on CFPB for Rules
The stay will remain in effect while the CFPB conducts a new rulemaking process, which includes seeking public feedback, the court said.
Providing a ‘Pause’
Analysts said the court’s action provides a pause that will allow the CFPB to engage in a new rulemaking process to address concerns about the rule’s legal foundation and impact.
As the CU Daily has previously reported, the Bureau stated that it believes the rule is “unlawful” and seeks to issue a new, revised rule that aligns with current policy goals and addresses what it perceives as defects in the original rule.
‘Common Sense Step’
“We are grateful for the court’s decision today to stay the existing rule’s compliance deadline until the CFPB completes its new rulemaking,” the Bank Policy Institute said in a statement. “This is a common-sense procedural step that doesn’t interfere with the rulemaking process but ensures banks won’t be forced to invest time and resources preparing for a rule that is currently being rewritten.”
BPI, KBA and Forcht Bank originally challenged the CFPB’s Section 1033 rule in October 2024, arguing that it put sensitive consumer financial data at risk and exceeded the CFPB’s legal authority.
