The US consumer finance watchdog has announced a new plan focused on the process of replacing the Biden-era Open banking regulations.
Following this announcement, a federal judge paused a lawsuit against the US Consumer Financial Protection Bureau (CFPB) that aimed to strike down Open Banking regulations, granting the request of agency to replace the contested rules that were adopted under former President Biden with a new version.
According to Reuters, the move made by CFPB to remake the regulations represented a reversal, as the agency had previously said the court should scrap the rules. At the same time, the institution also intended to provide customers with optimised control over their financial data and accelerate their development.
More information on the Open Banking regulations replacement
Under former President Joe Biden, the CFPB proposed regulations aimed to govern data sharing between fintech firms and traditional banks, as well as allow consumers to easily transfer their personal data between providers free of charge. Called for under the landmark 2010 Dodd-Frank Wall Street reform legislation, the regulations were also intended to reduce costs and increase the kinds of services available to consumers.
However, concerns from banks over liability for data breaches, fees for data access, and the ability to block misuse have prompted the CFPB to consider reopening the rulemaking process back in May, when the institution also told the court that it believed the regulations exceeded the agency's legal authorities and should be scrapped.
According to officials of the agency, the bureau decided to initiate a new rulemaking to reconsider the rule with a view to substantially revising it and providing a robust justification, as well as begin the process of an accelerated rulemaking procedure within three weeks.
The Financial Data and Technology Association (FDATA) released the following statement in the wake of the Consumer Financial Protection Bureau’s request for a stay in Forcht Bank, N.A. v. CFPB.
“The CFPB’s decision to request a stay in litigation underscores, in light of recent market developments, that the agency must continue to scrutinize banks’ anticompetitive attempts to charge punitive fees to allow consumers to share access to their financial data. We’re glad the CFPB recognized that financial institutions will take advantage of regulatory uncertainty and that consumers must retain the right to access and share access to their own financial data,” said Steve Boms, Executive Director of FDATA.
The Paypers also published an article on CFPB's new direction and the industry's reaction to it back in June, following the latest actions taken by the US Consumer Financial Protection Bureau (CFPB), the fintech and banking industry’s responses, and the broader implications for the US financial sector.
